Last financial year ending June 2019 the Home Building Compensation Fund stated a record loss of $201,595,000.00.
The Home Building Compensation Fund (HBCF) is managed by iCare and regulated by the State Insurance Regulatory Authority (SIRA), which commenced on 1st July 2010, after all private insurance companies pulled out of providing Home Owner Warranty market in New South Wales, due to losses they were suffering and not able to make a profit.
Home Building Compensation Fund, provides an insurance cover for home owners, and taken out by a contractor for any works over $20,000.00, however there is a catch, this is a last resort insurance, as there are four triggers to enact the policy.
Under these circumstances, making a claim against a contractor can be a very long drawn out process and very expensive, when your take on a contractor for incomplete and or defective works. Unlike a car insurance being a first resort insurance, you can go directly to the insurance company to fix your car, you can not with a Home Building Compensation Fund Policy. I’ll go into detail in another post about this.
The Home Building Compensation Fund went through a name change during January 2015, from Home Warranty Insurance Scheme (HWIS), what a said name change for the New South Wales Tax Payer, however, the name stands up for itself, as it is one big Fund to payout Compensation for Home Building.
Back to the financials, the premiums paid year ending June 2019 were $80,153,000.00 down $3,835,000.00 from the previous year, why is this?, we were lead to believe that we are in a building boom, the reality is new building contracts are not being signed up, possibly due to the tightening of lending money by the financial institutions.
How can this be? Insurance Premiums have doubled over the past couple of years, but iCare are still lossing money, why? further details about this to come in an updated article.
Can iCare stop lossing money? Without critical changes to the policies of Fair Trading and iCare, I can not see much hope.
What if iCare just stopped providing Home Building Compensation Fund Policies, would that help? Hell no, there is the Statutory Warranty Period of six years for Major Building Defects, with expenses of a couple of hundred million a year for the following six years, you could be looking at over a billion dollars in further expenses, without any income. WOW, so what are the chances of recovery for the Home Building Compensation Fund? further details about this to come in an updated article.
So who is paying for the losses that iCare have created? the NSW tax payers, further details about this to come in an updated article.
Stay tuned for an updated article coming soon about the Home Building Compensation Fund.