CBL joins call for compulsory Building Warranty Scheme
CBL Insurance Ltd is backing Auckland Mayor Phil Goff’s call for the introduction of a building warranty or insurance scheme.
CBL CEO Peter Harris says Mayor Goff’s comment that under the current regime Council is invariably “the last man standing” when claims are made against faulty building work is spot on, and the system needs to be changed.
“In our view, it should be compulsory for builders to take out liability cover against their statutory liabilities under the New Zealand Building Act, which makes builders personally liable for building defects for up to 10 years,” says Mr Harris.
“Otherwise, as the Mayor says, the building firm that did the work goes into insolvency, or the builder responsible disappears, and the ratepayer winds up footing the bill.”
CBL provides building warranty guarantees in five countries, including France and Australia where it is compulsory, a regime the Mayoral Housing Taskforce Report says could enable more innovation, reduce costs for both councils and builders, and improve the certainty of consenting processes.
Mr Harris says that while each country’s regulations are slightly different, CBL policies typically cover the building’s systems (building workmanship, gas, electrical, and plumbing) for the first two to three years, water-tightness for five years, and structural defects for up to 10 years.
Mr Harris says that alongside poor workmanship or substandard materials, one of the biggest risks to home-owners is non-completion arising from the financial collapse of a builder.
“In that case, under a CBL guarantee or insurance policy in New Zealand or Australia, CBL would step in and complete the house.”
Mr Harris says New Zealand’s leaky homes issue demonstrates how a compulsory builders warranty scheme could help ensure quality standards were maintained.
“When we wrote this risk a decade ago in New Zealand we insisted that all of our builders built with treated timber, with air gaps, proper flashings, and no monolithic claddings face-fixed onto framing. We did not agree with some of the building trends of that time, and wrote these terms into the policy conditions. As a result, we stayed completely outside the “Leaky Home” debacle,” said Mr Harris.
Jim Rickard of leading builders warranty insurance broker Builtin, also supports the call for a compulsory warranty scheme.
“We find that most good quality builders are prepared to stand behind their work,” says Mr Rickard.
“Our preference would be that warranties are insured by a registered third party insurance company rather than self funding, which in some cases, is currently what happens in New Zealand.” Mr Rickard also noted that CBL was the only New Zealand registered and locally based insurer offering warranties in this country.
CBL Corporation Limited (CBL) is a specialist insurer and reinsurer focused on credit and financial risk. CBL has eight offices spread across 25 countries and almost 550 employees. The company has been operating for over 43 years, and is listed on the ASX and the NZX Main Board. CBL’s main operating subsidiary is CBL Insurance Limited, which is a New Zealand licensed non-life insurer supervised and regulated by the Reserve Bank of New Zealand.
CBL also has a number of wholly owned subsidiary companies including CBL Insurance Europe, which is a regulated insurer in Ireland, Assetinsure, an Australian licensed non-life insurer supervised and regulated by Australian Prudential Regulation Authority, European Insurance Services Limited, a managing general agency (MGA) in Tunbridge Wells in the United Kingdom, Securities & Financial Solutions a managing general agency (MGA) in France and Professional Fee Protection, UKs leading fee protection provider offering expertise and market-leading support to help accountancy practices strengthen their client relationships and grow their revenue.
CBL specialises in writing building and construction related credit and financial surety insurance, bonding and reinsurance. CBL Insurance currently has a Financial Strength Rating of A- (Excellent) and an issuer rating of a-, with both outlooks ‘Stable’, from A.M. Best Ratings Agency.