Kevin Anderson
Minister for Better Regulation and Innovation

Statement on NSW Certifiers Insurance

The NSW Government has amended the Building Professionals Regulation to ensure that building certifiers can continue to operate.

Certifiers are required by NSW law to hold professional indemnity insurance, without exclusions or conditions, as a pre-requisite for accreditation, this is similar to the requirements in all other states and territories. The insurance is required to cover their past and current activities as a certifier.

Following the Grenfell tower fire in London in 2017, the global insurance market has tightened. Advice to the NSW Government confirms that all providers of professional indemnity insurance for certifiers in Australia have now confirmed they will change their policies so that new policies entered into from July 2019, will exclude indemnity for certifiers on work that relates to non-compliant and non-conforming cladding in building work.

In order to allow the Building Professionals Board to accept Professional Indeminty insurance policies with conditions or exclusions, the NSW Government has removed the requirement that would otherwise make the policy non-compliant and prevent certifiers from being accredited to provide services.

All other States and Territories are understood to be considering similar action to ensure they can accept policies with such exclusions.

This change does not alter the obligations of all building professionals to undertake work that is fully complies with other NSW laws, and the Building Code of Australia and relevant Australian standards. Certifiers are still obliged to ensure that work they are certifying meets these same standards.

This amendment is a short-term, urgent action to avoid a situation in which the unavailability of professional indemenity insurance prevents certifiers from operating, and pulls a hand brake on building and construction in NSW. The amendment will be removed in no later than 12 months, with the expectation that other reforms will improve the insurance market situation before then.

The NSW Government will closely monitor the situation to ensure that there are no adverse outcomes for consumers or certifiers from the change to professional indemenity insurance policy exclusions.

The NSW Government is continuing to work with all other States & Territories, and industry associations, to develop other reforms that will address the changed landscape for professional indemnity insurance for certifiers and some other building professionals. The meeting of the Building Ministers Forum to be held in July will consider this issue and reform options.

As part of the long-term solutions the NSW Government has also indicated to the industry professional associations that it encourages the associations to commit to pursue the development and approval of Professional Standards scheme for certifiers related to the performance of their statutory functions. These schemes can help to raise and assure the quality of services and professional conduct with associated benefits that can reduce risk and liability.

The NSW Government is committed to reforming the building and construction industry to improve the transparency, accountability and quality of work. The transition presents many challenges, however together with industry and the community we will face those challenges head-on to restore confidence in the sector.