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Parliamentary Questions

Question Without Notice No. 1242 asked in the Legislative Council on 24 October 2019 by Hon Charles Smith

Minister responding: Hon J.R. Quigley
Parliament: 40 Session: 1

Answered on

HOME INDEMNITY INSURANCE

1242. Hon CHARLES SMITH to the minister representing the Minister for Commerce:

I refer to pages 135 and 136 of the Annual Report on State Finances September 2019.

(1) What premiums have been received by the home indemnity insurance reinsurance account, and by whom?

(2) Why is the government reinsuring the risk of private sector insurers against the losses of private building groups that exceed $10 million?

(3) What is the total risk liability the Western Australian taxpayer has taken on to bail out building groups from failure?

Hon DARREN WEST replied:

I thank the honourable member for some notice of the question. I provide the answer on behalf of the Minister for Regional Development. The following information has been provided by the Minister for Commerce.

(1) An amount of $7.4 million was received by the Department of Mines, Industry Regulation and Safety as net premiums in 2018–19. The premiums were paid by builders obtaining insurance on behalf of their clients.

(2) Since November 2013, the state government has been reinsuring for all potential losses incurred against home indemnity insurance policies. This became necessary to ensure continuity of the scheme, because private insurers ceased to underwrite HII at their own risk in all jurisdictions in Australia.

(3) The state is liable for a maximum of $100 000 on each active building contract for a period of six years. The total risk liability is dependent on the number of active building contracts. Successive governments have taken the view that HII helps to protect consumers against potentially catastrophic financial losses in the event that their builders die, disappear or become insolvent. Furthermore, HII is central to maintaining consumer confidence in the home building market.