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Insurance hike will damage Victorian home building

Media release

Insurance hike will damage Victorian home building

Media release
“Today’s announcement by the Victorian Managed Insurance Authority (VMIA) that Domestic Building Insurance (DBI) premiums will increase by 43 per cent from 1 September 2023 is a blow for Victorian home builders and their clients,” said Keith Ryan, HIA Executive Director Victoria.

”The Victorian Government’s decision is only about improving the financial performance of the DBI scheme and is premature as the industry waits for the government to announce possible reforms to the scheme.

“This premium increase, which will directly add to the fees and charges paid by home buyers, will not be accompanied by any changes to the insurance benefits.

“The increase also adds to many challenges facing the residential building industry. This will do nothing to help deliver an increased number of desperately needed new homes.

“Home builder cashflow positions, already precariously thin under the weight of sustained pressure from rising building material and labour costs, will be further squeezed by the significant hike in DBI premiums.

“Builders want to stay competitive, but they will have little option but to factor the premium rise into the cost of a new dwelling and pass on to home buyers,” said Mr Ryan.

While acknowledging pressure on premiums has been building for some time due to VMIA’s growing claims exposure to builder insolvencies in recent years, Mr Ryan said the order of magnitude of the across-the-board increase from 1 September is unfair and without precedence.

The vast majority of Victorian builders are not triggering DBI claims and are continuing to complete homes for their clients despite the current challenges they all face.

“Last week’s decision by the Reserve Bank to keep interest rates on hold provided a respite for the embattled residential building sector.

“This announcement has dented that relief and is a stark reminder to home builders that the cost of doing business in Victoria is getting harder, not easier," concluded Mr Ryan.

For more information please contact:

Keith Ryan

Executive Director - Victoria
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