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
(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?
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
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.