Reforms to the Home Building Compensation scheme commenced on 1 January 2018 to improve the financial sustainability of the scheme. The market for insurance was opened to competition and innovation, and premiums were to be transitioned to levels that reflected the risk of different projects, and recover the costs of the scheme.
The reforms also enhanced the powers of the scheme regulator, SIRA, to monitor and regulate the home building compensation scheme by:
- licensing private providers
- assessing and approving or rejecting premiums
- managing the performance of the scheme’s providers and regulating their financial and prudential positions
- issuing and enforcing HBC insurance guidelines with rules for premium setting, fees, market practices and claims handling
- using data collection and analytics to increase transparency and accountability, and competition and innovation
- operating the Building Insurers’ Guarantee Fund to provide a safety net for policy holders if a provider is declared insolvent.
Now that these reforms have been in place for two years, IPART will assess whether any further changes are required to improve the efficiency and effectiveness of the scheme.
IPART’s review is only one small part of the NSW Government’s broader reform program in relation to the building and construction industry. The Building Commissioner has been appointed to lead the implementation of the reforms and advise Government on any additional reforms that may be needed to ensure better protections for homeowners and to lift building standards across NSW.