Following the government announcement the HBCF Insurance has commeced its reforms to ensure long term financial sustainability and to improve services to customers.
These improvements, such as introducing risk-based pricing mean that lower risk building contractors will receive more equitable outcomes and clarity on their premium. The new pricing includes the introduction of risk based pricing for individual building contractors so that contractors with lower risk characteristics will no longer subsidise higher risk businesses. In turn, consumers will benefit by being able to make better informed choices.
In its current form, HBCF insurance is not financially sustainable. Without reform this will compromise its ability to protect homeowners now and into the future. Premium prices have not kept pace with the insurance claims experience of the fund and current pricing does not cover claims costs and other related expenses. Right now, icare hbcf insurance claims and running costs are substantially exceed its income which is primarily drawn from premiums.
To remain viable, any insurance scheme must charge a price for premiums which is sufficient to cover costs. Unless the scheme is significantly reformed, it may not be able to protect homeowners.
The icare hbcf provides a safety net for homeowners who have contracted for residential building work and their builder has been unable to honour their commitments under the building contract due to insolvency, death or disappearance. The safety net is also provided where the builder's licence is suspended for failure to comply with a Tribunal or Court Order to pay compensation to the homeowner.
Insurance under the HBCF is required to be obtained by builders for all residential construction projects over $20,000.
icare (Insurance and Care NSW) was created in September 2015 through the commencement of the State Insurance and Care Governance Act. icare is a Public Financial Enterprise governed by an independent Board of Directors that delivers insurance and care services to the people of New South Wales.
The NSW Self Insurance Corporation (SICorp), Home Building Compensation Fund (HBCF) along with other like agencies such as the Workers Compensation Nominal Insurer, Lifetime Care and Support, Sporting Injuries Compensation and the Dust Diseases Authority have joined icare.