Posted by: TJL Accountants & Advisors | On: August 27, 2019

The combustible cladding crisis is causing a major rift between the Insurance Council of Australia (ICA) and the government, and the disaster has already caused professional indemnity insurance premiums for some individuals to rise up to 500%. This information has been put together by PSC Connect to give a rundown of the situation.

Australian insurance providers are under rising pressure to help rectify the combustible cladding crisis, with the government taskforce saying that by contributing to the repair the insurance companies will reduce their exposure to future claims involving the cladding.

However, the ICA believes that those who caused the issues should be the ones held accountable. They argue that insurers did not build, certify or have any input in the construction of the affected buildings and so have no direct obligation to resolve the crisis.

Since the severe defects have come to light, insurance premiums for surveyors, engineers and architects have increased significantly – in some cases, professional indemnity insurance is now costing up to 500% more. Often, these premiums also include broad exclusions that aim to minimise the exposure of insurers. The professionals impacted by these changes have said that to combat this financial burden, they will need to pay their staff less and charge more for their product or service.

The flammable cladding crisis is still yet to be resolved and, to protect the Australian construction industry, swift government action is crucial. Time will tell the long term impact on insurance companies and professionals caught up in the debacle.

Obtaining the appropriate insurance for your needs should be a priority. If you have any queries relating to your building’s cladding or your other insurances, don’t hesitate to get in touch with Matt and Shaun at TJL Insurance.