Footnotes

Chapter 1 - Introduction

[1]        Hearing of Vero Insurance Ltd on 20 June 2008 and of HIA Insurance Services Pty Ltd on 11 August 2008.

[2]        Productivity Commission, Review of Australia's Consumer Protection Framework, report 45, 30 April 2008

[3]        The cover is also broader in Queensland: it includes no-fault subsidence (providing the builder has tested the ground according to the Australian Standard); cover for consumers who are not insured because of the builder's fraud; and no 20 per cent cap for non-completion.  In the ACT the Master Builders Fidelity Fund may at its discretion, and sometimes has, paid claims where the builder was not dead, disappeared or insolvent. Queensland Building Services Authority, submission 8, attachment, p5. Mr J. Howard (Master Builders Fidelity Fund), Committee Hansard 13 June 2008, p.43

[4]        In South Australia the scheme under the Building Work Contractors Act 1995 carries over that established by the Builders Licensing Act 1986.  An industry-based voluntary scheme operated before then. In Western Australia the scheme was voluntary before 1997.

 

Chapter 2 - Description and history of home warranty insurance schemes

[1]        Often called builder's warranty insurance or home builders' warranty insurance; home indemnity insurance in Western Australia.

[2]        Other statutory limits are in Queensland $400,000; SA $80,000; WA $100,000, Tas $200,000; ACT $85,000; NT $80,000. Insurance Council of Australia, submission 44, attachment A.

[3]        The current government operated first resort scheme in Queensland provides more cover than the last resort schemes in other states, viz: no-fault subsidence (providing the builder has tested the ground according to the Australian Standard); cover for consumers who are not insured because of the builder's fraud; and no 20 per cent cap for non-completion claims.  

[4]        Mr J. Howard (Master Builders Fidelity Fund), Committee Hansard 13 June 2008, p.45

[5]        This section is based on Insurance Council of Australia , submission 44, and Productivity Commission, Review of Australia's Consumer Policy Framework, April 2008, p119

[6]        Apart from the points in square brackets, this is the complete text of a document provided by the Builders Collective of Australia, which appears to be contemporary but has no author or date. It is presumably the '10 point plan'  referred to in the governments' announcement of 13 March 2002, however the Committee has not been able to find it in its original context to confirm this. Builders Collective of Australia, submission 20, p.14. P. Allen, National Review of Home Builders Warranty Insurance and Consumer Protection, report to Ministerial Council on Consumer Affairs, June 2002, p.20

[7]        To take the NSW scheme as an example: the regulation provides that the insurance must provide certain cover (eg 'loss or damage resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor'), and may contain certain limitations on the cover (eg 'the contract may limit liability resulting from non-completion of the building work to an amount that is 20 per cent of the contract price....'). Nothing stops insurers from offering wider cover, but in practice this does not happen. The reference to 'maximum' cover in point 5 of the 10 point plan is misleading. Home Building Regulation 2004 [NSW], cl.56,58. Similarly Victorian Government Gazette 23 May 2002, Domestic Building Insurance Ministerial Order.

[8]        P. Allen, National Review of Home Builders Warranty Insurance and Consumer Protection, report to Ministerial Council on Consumer Affairs, June 2002, p.vii

[9]        VCEC, Home Building Regulation in Victoria - Building Better Outcomes, October 2005, p.218

[10]      VCEC, Home Building Regulation in Victoria - Building Better Outcomes, October 2005, p.225ff

[11]      Legislative Council General Purpose Standing Committee No. 2, Inquiry into the Operations of the Home Building Service, December 2007, p.73ff

[12]      Productivity Commission, Review of Australia's Consumer Policy Framework, April 2008, p126-7

[13]      Department of Justice (Tasmania), A New Consumer Building Framework - consultation paper, February 2008. Productivity Commission, Review of Australia's Consumer Policy Framework, April 2008, p125

[14]      This section is sourced generally from NSW Legislative Council General Purpose Standing Committee No. 2, Inquiry into the Operations of the Home Building Service, December 2007, p.73ff; and from the NSW Office of Fair Trading's submission 16 to that inquiry

[15]      NSW Home Warranty Insurance Inquiry - Final Report, 30 September 2003 [Grellman inquiry]

[16]      Office of Fair Trading, submission 16 to NSW Legislative Council General Purpose Committee No. 2 Inquiry into the Operations of the Home Building Service, 2006, p.19

[17]      Office of Fair Trading, submission 16 to NSW Legislative Council General Purpose Committee No. 2 Inquiry into the Operations of the Home Building Service, 2006, p.43,46

[18]      Victorian Building Commission annual report 2006-07, p.36. Victorian Government , submission 38, p.3-4

[19]      Consumer Affairs Victoria, submission 91 to VCEC Housing Regulation inquiry 2005, p.11. Department of Sustainability and Environment, submission 84, to VCEC Housing Regulation inquiry 2005, p22.

[20]      Victorian government, submission 38, p.4

[21]      Victorian government, submission 38, p.5

[22]      This section relies generally on submission 8 , Queensland Building Services Authority.

[23]      Mr I. Jennings (Queensland Building Services Authority), Committee Hansard 10 April 2008, p.19

[24]      Queensland Building Services Authority, submission 8, attachment, p.3

 

Chapter 3 - Issues raised by builders

[1]        Submission 78, confidential.

[2]        Submission 114, Builders Collective of Australia, p.3

[3]        For example, see Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.212

[4]        Vero Insurance Ltd, correspondence 13 October 2008.

[5]        Vero Insurance Ltd, confidential additional information 23 June 2008, p.3

[6]        Victorian Competition and Efficiency Commission, Housing Regulation in Victoria - building better outcomes, October 2005, p.225

[7]        Vero Insurance Ltd, correspondence 31 October 2008.

[8]        Deed of indemnity: the signatory indemnifies the insurer directly against costs arising from claims. Bank guarantee: the bank guarantees to pay the insurer up to a certain amount on demand. The bank then recovers from the signatory.

[9]        Builders Collective of Australia, submission 114, p.3

[10]      Mr J. Howard, Master Builder Fidelity Fund, Committee Hansard 13 June 2008, p.53. Similarly Builders Collective of Australia, submission 114, p.3.

[11]      NSW Office of Fair Trading submission 16a to NSW Legislative Council General Purpose Standing Committee No. 2, inquiry into the operations of the Home Building Service, p.7. NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - information on the scheme as at 31 March 2008, p.5.

[12]      It appears there are complaints about guarantees being held unreasonably long, and about guarantees being held after the possibility of loss has ended. The second complaint appears to refer to open-ended bank guarantees in which the bank guarantees to pay the insurer unconditionally on demand, then recovers from the signatory. No issue arises with deeds of indemnity which refer specifically to reimbursing claims paid under policies, since the deed becomes irrelevant when the time limit for making claims expires.

[13]      Mr G. McCarthy (NSW Home Warranty Insurance Scheme Board), Committee Hansard 13 June 2008, p.79

[14]      Dr R. Silberberg (Housing Industry Association), Committee Hansard 17 September 2008, p.9.

[15]      Mr G. Donovan (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.17.

[16]      Queensland Building Services Authority, submission 8, attachment p.2

[17]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.2. Queensland Building Services Authority, additional information 1 October 2008, p.1. HIA, correspondence 17 October 2008. Queensland Building Services Authority Act 1991, s71,111C

[18]      For example, RDC Constructions, submission 23; Builders Collective of Australia, submission 67, p.3

[19]      Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.234

[20]      Vero Insurance Ltd, submission 171 to VCEC Housing Regulation inquiry 2005, p.21

[21]      Vero Insurance Ltd, submission 171 to VCEC Housing Regulation inquiry 2005, p.17

[22]      Builders Collective of Australia, submission 67, p.3

[23]      Vero Insurance Ltd, correspondence 24 July 2008, p.9

[24]      Victorian Competition and Efficiency Commission, Housing Regulation in Victoria - building better outcomes, October 2005, p.236-8.

[25]      Owner-builders permits in Victoria in 2004-05: 33,626; in 2006-07: 26,436.  Building Commission, annual report 2006-07, p.35

[26]      Vero Insurance Ltd, confidential additional information 18 June 2008, p.27

[27]      Vero Insurance Ltd, submission 171 to VCEC Housing Regulation inquiry, 2005.

 

Chapter 4 - Issues raised by consumers

[1]        Mrs I. Onorati (Building Action Review Group), Committee Hansard 13 June 2008, p.5. Similar comments in NSW Legislative Council General Purpose Standing Committee No.2, Inquiry into the Operations of the Home Building Service, December 2007, p.86. NSW Office of Fair Trading, additional information 23 August 2008, p.5

[2]        Mr D. Turner (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.22. Mr C. Lamont (Housing Industry Association), Committee Hansard 17 September 2008, p.12

[3]        Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.8

[4]        Mr G. Renouf (CHOICE), Committee Hansard 13 June 2008, p.20. Similarly Mr P. Dwyer (Builders Collective of Australia), Committee Hansard 10 April 2008, p.6. Mr C. Lamont (Housing Industry Association), Committee Hansard 17 September 2008, p.12

[5]        In the Alberta New Home Warranty Program

[6]        Mr D. Farrell (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.21

[7]        R. Siebert, submission 5, p.1. Similarly Consumer Action  Law Centre, submission 32. p.4

[8]        Building Ethics Australia Pty Ltd, submission 113 p.3

[9]        Housing Industry Association, submission 60 p.13

[10]      Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.6

[11]      Mr G McCarthy (NSW Home Warranty Insurance Scheme Board), Committee Hansard 13 June 2006 p.73

[12]      Victorian Government, submission 38, p.5

[13]      Housing Industry Association, additional information 17 September 2008, p.1

[14]      Mr S. Goodwin (HIA), Committee Hansard 17 September 2008, p.5

[15]      Mr S. Goodwin (HIA), Committee Hansard 17 September 2008, p.5. The rationale for the cap on claims for non-completion (now 20 per cent of the contract value) appears to be a view that this is a reasonable limit to the incidental costs of completing the house with another builder; given that the consumer has the value of work already done, and should not have paid for work not done.

[16]      Housing Industry Association, additional information 17 September 2008, p.1

[17]      Housing Industry Association, additional information 17 September 2008, p.2

[18]      Housing Industry Association, additional information 17 September 2008, p.2

[19]      Mr G. Simpson (Housing Industry Association), Committee Hansard 17 September 2008, p.19

[20]      Housing Industry Association, correspondence 17 October 2008, p.5

[21]      [Victorian] Building Commission, Annual Report 2006-07, p.32

[22]      For example, Housing Industry Association, Guide to Materials and Workmanship for Residential Building Work, n.d. [2008]

 

Chapter 5 - Responses from insurers and regulators

[1]        Vero Insurance Ltd, correspondence 24 July 2008, p.13

[2]        Vero Insurance Ltd, correspondence 16 August 2008

[3]        'Charges' includes all commissions, government and other charges reported by the insurer. It does not include charges by brokers to the customer. The 'including charges' premium is about 30% more than the 'excluding charges' premium: p.10. The higher figure for all projects, compared with single dwellings, arises because the rate per thousand dollars is higher for things like multi-unit buildings ($5.52), additions ($7.56) and renovations ($8.51). NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - information on the scheme as at 31 March 2008, p.9-12.

[4]        Victorian Government, submission 38 p.3

[5]        Vero Insurance Ltd, correspondence 24 July 2008 p.8.

[6]        Although the home warranty portfolio is less than 1 per cent of Suncorp's commercial insurance business: Committee Hansard 20 June 2008 (in camera), p.1

[7]        Vero Insurance Ltd, confidential additional information 23 June 2008, p.7.

[8]        Builders Collective of Australia, additional information 8 September 2008, p.13

[9]        Mr R. Joseph (Builders Collective of Australia), Committee Hansard 10 April 2008, p.11. Vero Insurance Ltd, correspondence 13 October 2008, p.2

[10]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.7

[11]      Vero Insurance Ltd, correspondence 24 July p.10

[12]      Vero Insurance Ltd, submission 171 to VCEC Housing Regulation inquiry 2005, p.16

[13]      Vero Insurance Ltd, correspondence 24 July p.3,10

[14]      Vero Insurance Ltd, confidential additional information 23 June 2008, p.61

[15]      Vero Insurance Ltd, confidential additional information, 23 June 2008, p.13

[16]      Vero Insurance Ltd, submission 171 to VCEC Housing Regulation inquiry 2005, p.16

[17]      Insurance Council of Australia, submission 44, p.2

[18]      Vero Insurance Ltd, confidential additional information 23 June 2008, p.19

[19]      For example, Mr R. Joseph (Builders Collective of Australia), Committee Hansard 10 April 2008, p.2-3

[20]      For example, Mr G. Renouf (CHOICE), Committee Hansard 13 June 2008, p.22

[21]      For example, Insurance Council of Australia, submission 44, p.3. Housing Industry Association, submission 60, p.4,13.

[22]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 March 2008, table D2.2

[23]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 March 2008, p.9

[24]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 March 2008, p.10. Premium including charges: $13,899,000 in June 2006 quarter; $9,767,000 in March 2008 quarter. Premium excluding charges: $11,090,000 in June 2006 quarter; $7,337,000 in March 2008 quarter. 'Including charges' includes all commissions, government and other charges reported by the insurer. It does not include charges by brokers to the customer: p.9. Does not include owner builders.

[25]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 December 2007, p.15. Mr G. McCarthy (NSW Home Warranty Insurance Scheme Board), Committee Hansard 13 June 2008, p.74.

[26]      Mr G. McCarthy (NSW Home Warranty Insurance Scheme Board), Committee Hansard 13 June 2008, p.75

[27]      D. Smith, Builders Warranty - first resort or last resort or does it really matter, paper to Institute of Actuaries of Australia 15th general seminar, 16-19 October 2005, p.6

[28]      Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.2. 'net loss ratio': ratio of claims to premium net of reinsurance expense and reinsurance recoveries. The different between net premiums and net claims is what the insurer retains to pay administrative expenses, commissions to brokers, and its own profit.

[29]      Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.5.

[30]      Vero Insurance Ltd, confidential additional information, 23 June 2008, p.7-9. APRA, Half Yearly General Insurance Bulletins, various years, table 7.

[31]      For example, Mr R. Joseph, Committee Hansard 10 April 2008, p.3

[32]      Mr R. Joseph (Builders Collective of Australia), Committee Hansard 10 April 2008, p.3.

[33]      Builders Collective of Australia, submission 20 p.2

[34]      National Insurance Brokers Association, submission 127 p.4-5

[35]      Vero Insurance Lt, confidential additional information 23 June 2008, p.4. Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.8

[36]      Vero Insurance Ltd, correspondence 13 October 2008

[37]      Mr D. Farrell (HIA Insurance  Services Ltd), Committee Hansard 11 August 2008 (in camera), p.5

[38]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 March 2008, p.10

[39]      Mr D. Farrell (HIA Insurance  Services Ltd), Committee Hansard 11 August 2008 (in camera), p.5

[40]      NSW Office of Fair Trading, NSW Home Warranty Insurance Scheme - Information on the Scheme as at 31 March 2008, p.9

[41]      Mr D. Farrell (HIA Insurance  Services Ltd), Committee Hansard 11 August 2008 (in camera), p.5. HIA Insurance Services, correspondence 27 October 2008.

[42]      Vero Insurance Ltd, correspondence 24 July 2008, p8

 

Chapter 6 - Other consumer protection issues

[1]        Mr M. Stokes, Committee Hansard 13 June 2008, p.32

[2]        Vero Insurance Ltd, confidential additional information 18 June 2008, p.21 

[3]        NSW Government, submission 34, p.5

[4]        Victorian Government, submission 38, p.4

[5]        Mr C. Wright (Queensland Building Services Authority), Committee Hansard 10 April 2008, p.27

[6]        Housing Industry Association, submission 60, p.9

[7]        Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.227

[8]        Mr S. Griffin, (NSW Office of Fair Trading), Committee Hansard 13 June 2008, p.78.

[9]        Consumer Action Law Centre, submission 32, p.9

[10]      Consumer Action Law Centre, submission 32, p.5

[11]      NSW Office of Fair Trading, submission 16 to Legislative Council General Purpose Standing Committee No.2, Inquiry into the Operations of the Home Building Service, November 2006, p.43

[12]      NSW Government, submission 34, p.4

[13]      Victorian government, submission 38, p.3

[14]      NSW Office of Fair Trading, submission 16 to Legislative Council General Purpose Standing Committee No.2, Inquiry into the Operations of the Home Building Service, November 2006, p.41

[15]      Victorian Civil and Administrative Tribunal, Annual Report 2006-07, p.23

[16]      In principle the issue here is first resort versus last resort, not government versus non-government;  but '...government scheme' is used because of the strong evidence that private insurers would not participate in a first resort scheme.

[17]      Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.227

[18]      Master Builders Association of WA, submission 37, p.2

[19]      Mr G. Renouf (CHOICE), Committee Hansard 13 June 2008, p.28. Similarly Consumer Action Law Centre, submission 32, p.7. Dr R. Silberberg (Housing Industry Association), Committee Hansard 17 September 2008, p.13

[20]      NSW Government, submission 34 p.3. Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.197,213

[21]      Mr G. Donovan (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.10. Mr P. Jameson (Vero Insurance Ltd) Committee Hansard 20 June 2006 (in camera), p.16

 

Chapter 7 - Other matters

[1]        Senate Economics References Committee, A Review of Public Liability and Professional Indemnity Insurance, October 2002, p.78ff

[2]        APRA, National Claims and Policies Database - explanatory notes, 5 September 2007, p.5

[3]        'Risks written' is different from policies written as a policy may have more than one associated risk.  APRA, National Claims and Policies Database - explanatory notes, 5 September 2007, p.6

[4]        See www.ncpd.apra.gov.au  APRA intends that some non-APRA-regulated insurance providers, including Lloyd's Australia Ltd and state and territory insurers,  will be included in future reports.  National Claims and Policies Database - Overview of Professional Indemnity and Public and Product Liability Insurance, 5 September 2007, p.4

[5]        The 14 classes of general insurance reported in APRA's  half-yearly reports are further described in the general insurance reporting instructions. Home warranty insurance, with gross premiums estimated at about $85 million by HIA Insurance Services,  is about 5 per cent of public and product liability with gross premiums of about $1.9 billion in 2007. APRA, Half Yearly General Insurance Bulletin, December 2007, p.19. Mr D. Farrell (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.1

[6]        Department of the Treasury, additional information 29 July 2008, p.10. See also Ms V. Wilkinson (Treasury), Committee Hansard 13 June 2008, p.59-60

[7]        Builders Collective of Australia, correspondence 25 August 2008, p.6

[8]        Mr P. Jameson & Mr J. Nagle (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.7,12. Vero Insurance Ltd, correspondence 13 October 2008

[9]        For example, Housing Industry Association, submission 60, p.8. Builders Collective of Australia, submission 20, p.8-9: 'This action removed the BWI product from any form of consumer protection scrutiny by any authority including ACCC, APRA and of course ASIC as last resort BWI was now deemed a wholesale product'. Mr P. Dwyer (Builders Collective of Australia), Committee Hansard 10 April 2008, p.3: 'The 10 point plan... put in motion a change to the corporations regulation to allow this to come into play.'

[10]      Builders Collective of Australia, correspondence 27 June 2008, p.1

[11]      A 'financial product' includes a contract of insurance (with exceptions not relevant here): s764A

[12]      Treasury, additional information 29 July 2008, p.13

[13]      Providing the purchaser is an individual or small business as defined.

[14]      Financial Services Reform Bill 2001, explanatory memorandum, p.1,29-30. The listed classes are motor vehicle, home building, home contents, sickness and accident, consumer credit, travel, and personal and domestic property insurance, as defined in the regulations. The list can be added to by regulation. All but the last copy the classes subject to 'standard cover' consumer protection provisions in the Insurance Contracts Act. The 'standard cover' provisions have the effect that an insurance contract is assumed to have certain conditions relating to the events covered and the minimum cover, unless the insurer has clearly advised to the contrary. Insurance Contracts Act 1984, s32-37. Insurance Contracts Regulations 1985, reg 5ff. 

[15]      Corporations Amendment Regulations 2001 (No.4), explanatory statement, p.3-4

[16]      The Insurance Contracts Act  1984 as a whole, thus including the standard cover provisions, does not apply to insurance for the purposes of a law relating to workers compensation, or insurance for the purposes of a law relating to compensation for death or injury resulting from the use of a motor vehicle: s9.

[17]      If the insurance is not mandatory ('entered into for the purposes of a law') the exclusion does not apply, and the purchaser would be a retail client providing some other tests are satisfied (the purchaser should be an individual or small business as defined, and the insurance should satisfy the definition of 'home building insurance product' in the regulation). It should be remembered that in this case the purchaser is the builder, not the homeowner. Department of the Treasury, additional information 29 July 2008, p.13

[18]      Corporations Amendment Regulations 2001 (No.4), explanatory statement, p.6

[19]      Ms V. Wilkinson (Department of the Treasury), Committee Hansard 13 June 2008, p.57-58. It is not clear that this was the original motivation for excluding certain state-mandated insurance from the Insurance Contracts Act 1984, which was the precursor of the present provision. The exclusion of workers compensation and compulsory third party insurance came about because the Act responded to recommendations of  the Australian Law Reform Commission's report 20, Insurance Contracts (1982), and these classes were excluded from the ALRC's terms of reference. The reason for excluding them from the ALRC's terms of reference is not discussed in the ALRC report, however the explanatory memorandum of the Insurance Contracts Bill 1984 commented: 'They are both forms of compulsory liability insurance and so subject to different considerations such as whether they should be replaced by a principle of general accident compensation': p18.

[20]      Vero Insurance Ltd, correspondence 24 July 2008, p.11

[21]      Insurance Contracts Regulations 1985, reg. 11.

[22]      National Insurance Brokers Association, submission 127 p.4

[23]      Ms V. Wilkinson (Department of the Treasury), Committee Hansard 13 June 2008, p.58

[24]      They would have to satisfy the other tests of 'retail client': relevantly they must be either an individual or a small business employing less than 20 people: Corporations Act 2001, s761G(5) & (12). For dispute resolution schemes: Corporations Act 2001, s912A. Treasury, additional information 29 July 2008, p.4

[25]      The scheme allows for 'non-claim' disputes which may include 'the failure to offer insurance or to only offer insurance on non-standard terms'. Financial Ombudsman Service, General Insurance Terms of Reference, 1 July 2008, clause 4.3

[26]      For small business applicants as defined public and product liability insurance is excluded. Compulsory third party motor vehicle and workers compensation is generally excluded. Financial Ombudsman Service, General Insurance Terms of Reference, 1 July 2008, clauses 1.2, 2.1

[27]      The FOS board has done an initial public consultation, and plans to put out  draft Terms of Reference for further stakeholder comment early in 2009. Financial Ombudsman Service, Developing New Terms of Reference for the Financial Ombudsman Service, 14 August 2008, p.4

[28]      Builders Collective of Australia, submission 119, p.1

[29]      Home warranty insurance appears to be about 5 per cent of the liability class: see footnote to paragraph 7.5.

[30]      The comment assumes that 'State insurance' within the meaning of the Insurance Contracts Act 1984 and s51(xiv) of the Constitution means insurance issued by the state as insurer. This appears to be the case: see the High Court case Attorney-General (Vic) v Andrews, (2007) 233 ALR 389, which assumes that 'state insurance' has a meaning analogous to 'state banking'.

[31]      Australian Securities and Investments Commission Act 2001, part 2. Trade Practices Act 1974, parts 4A & 5.

[32]      With a few exceptions that are not relevant here. Australian Securities and Investments Commission Act, s12BAA(7) & (8)

[33]      With a few exceptions noted in the Constitution, which are not relevant here.

[34]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.1. Builders Collective of Australia, additional information 25 July 2008, p.3

[35]      For example, Mr R. Joseph, Committee Hansard 10 April 2008, p.12

[36]      Housing Industry Association, submission 75, p.3.

[37]      The other half owner is Aon Risk Services. Aon is Australia's and the world's largest insurance broker. HIAIS operates as an authorised representative under the licence of Aon Risk Services. Mr D. Farrell (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.2-3

[38]      Mr D. Farrell (HIA Insurance Services Pty Ltd), Committee Hansard 11 August 2008 (in camera), p.2,9

[39]      Mr G. Donovan (HIA Insurance Services), Committee Hansard 11 August 2008, p.6

[40]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.1. The total 'licence fee' from HIAIS to HIA, which represents the profit share, was about $6 million, but this includes profit attributable to other lines of business. HIA Insurance Services Annual Report 2006.

[41]      HWI-related HIAIS profit share/HIA revenue ($ million): 2005: 2.7/69.3=3.9%. 2006: 2.5/74.2=3.4%. 2007: 2.35/84.8= 2.8%.  Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.1. HIA annual reports. HIA Insurance Services, correspondence 27 October 2008.

[42]      Mr G. Donovan (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.23. HIAIS, correspondence 27 October 2008

[43]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.1

[44]      Mr G. Donovan (HIA Insurance Services), Committee Hansard 11 August 2008 (in camera), p.24

[45]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.11

[46]      Under s249D of the Corporations Act 2001 a general meeting of a company may be requisitioned by at least 100 members who are entitled to vote at the meeting.  The Corporations Act also has provisions about who is entitled to vote at a general meeting (s250E), but this is a replaceable rule - the Act allows a company's constitution to change the rule. Under the HIA's constitution (the Articles of Association) those entitled to vote at a general meeting of the whole association are limited to those entitled to attend and vote at the National Policy Congress; and those entitled to attend and vote at the National Policy Congress  are limited to certain regional and  national office bearers. HIA Articles of Association 31, 55(b)

[47]      HIA Articles of Association 28: a Regional Executive Committee may establish branches and pass by-laws for the administration of branches including for the election of office bearers of branches. There are nine HIA regions, mostly following state boundaries.

[48]      HIA Articles of Association 54-55.

[49]      Dr R. Silberberg (HIA), Committee Hansard 17 September 2008, p.7

 

Chapter 8 - Summary and recommendations

[1]        NSW Legislative Council General Purpose Standing Committee No. 2, inquiry into the operations of the Home Building Service, December 2007, p.82.

[2]        Office of Fair Trading, submission 16a to Legislative Council General Purpose Committee No.2, Inquiry into the Operations of the Home Building Service, December 2006, p.7

[3]        Housing Industry Association, submission 60, p.10

[4]        Vero Insurance Ltd, submission 71 to VCEC inquiry into Housing Regulation, p.8,18

[5]        VCEC reached similar conclusions in 2005: Victorian Competition and Efficiency Commission Housing Regulation in Victoria - building better outcomes, October 2005, p.225-6

[6]        Queensland Building Services Authority, submission 8, att. p.5. Mr I. Jennings (BSA), Committee Hansard 10 April 2008, p.20.  No fault cover for subsidence applies providing the builder tested the ground according to the Australian Standard.

[7]        In the NSW CTTT 36 per cent of cases are finalised within 35 days of receipt, but the statistic does not show how long the other 64 per cent take. NSW Office of Fair Trading, submission 16 to Legislative Council General Purpose Standing Committee No.2, Inquiry into the Operations of the Home Building Service, November 2006, p.41

[8]        Given the complexities, care would need to be taken not to prohibit sound but non-standard work methods. A standard could be incorporated into regulation to the effect that there is a rebuttable presumption that work of a listed type, not within the set tolerance, is defective.

[9]        Victorian Government, submission 38, p.5

[10]      Vero Insurance Ltd, confidential additional information 23 June 2008, p.23

[11]      'Data items are not included in the NCPD reports at this aggregate level unless at least three insurers contribute to the aggregate total for that data item. For policy reports, a data item is not reported where a single insurer contributes more than 85 per cent  of the aggregate total or two insurers contribute more than 90 per cent of the total. These rules may be relaxed for claim reports if there is sufficient participation in the particular market to prevent identification of individual insurer claim information.'  APRA, National Claims and Policies Database - explanatory notes, 5 September 2007, p.5

 

Appendix 3 - Summary of Australian building regulation and home warranty insurance schemes

[1]        Increased from $200,000 in March 2007 as per schedule 1 of the Home Building Amendment (Minimum Insurance Cover) Regulation 2007 (NSW) which amended the Home Building Regulation 2004 (NSW).

[2]        The following information reflect the law in Tasmania as at 18 April 2008.

[3]        NT Government, Residential Building Reform, September 2007, p.9

 

Appendix 4 - Allegations about Senator Helen Coonan

[1]        Builders Collective of Australia, submission 20, p.7; additional information 17 June 2008. Mr P. Dwyer (BCA), Committee Hansard 10 April 2008, p.4-5

[2]        Builders Collective of Australia, correspondence 8 July 2008. Mr P. Dwyer (BCA), Committee Hansard 10 April 2008, p.4.

[3]        Mr P. Dwyer (Builders Collective of Australia), Committee Hansard 10 April 2008, p.4

[4]        Mr P. Dwyer (Builders Collective of Australia), Committee Hansard 10 April 2008, p.4

[5]        Vero Insurance Ltd, correspondence 25 July 2008. Mr P. Jameson (Vero Insurance Ltd), Committee Hansard 20 June 2008 (in camera), p.13-14

[6]        Builders Collective of Australia, submission 20, p.8. Mr P. Dwyer (Builders Collective of Australia), Committee Hansard 10 April 2008, p.4

[7]        The Hon. Senator H. Coonan, additional information 6 June 2008.

[8]        Builders Collective of Australia, correspondence 8 July 2008.

[9]        Senator Coonan was formally the chair when the committee secretariat received the Corporations Amendment Regulations 2001 (No.4) on 17 October 2001. However this was during the campaign period for the November 2001 election, and the committee conducted no more business until a new committee was formed under a different chair after the election. The new committee considered the regulations at a meeting on 11 March 2002, and sought advice from the minister on some matters, but not on regulation 7.1.12. J. Warmenhoven, Secretary, Senate Regulations and Ordinances Committee, correspondence 30 September 2008.