4 October 2001

National Review Of Builders Warranty Insurance


Joint Media Release with
John Watkins
NSW Minister for Fair Trading

The Minister for Financial Services and Regulation, Joe Hockey and the NSW Minister for Fair Trading, John Watkins, today announced the Ministerial Council on Consumer Affairs had agreed to a review of home builders warranty insurance schemes across Australia.

Consumer Affairs Ministers agreed in July to a national review that would look at improving the operations of compulsory home builders warranty insurance schemes.

Home builders warranty insurance protects home owners from defective or incomplete building work. It is taken out by builders, but covers the work they do on behalf of consumers.

The schemes are run by the States or territories and are all currently different.

"Although the home warranty market now seems to be settling down, it is timely to look at how the schemes can be strengthened to provide greater security for home owners and builders and to encourage more competition in the sector," Minister Watkins said.

"The review will seek to improve consistency and competition and that will mean a better deal for consumers and builders alike."

Minister Hockey said the Commonwealth was not seeking to take over the schemes, but the national nature of the insurance business meant the Federal Government had a facilitation role to play for the States.

The former head of the NSW Treasury, Percy Allan, would conduct the review which was expected to be completed by mid 2002.

The review's Terms of Reference [attached] had been drafted by Mr Watkins.

For inquiries, contact: Neil Power, Ministerial Council on Consumer Affairs, 02 6263 3051.

4 October 2001

Media contact: Matthew Abbott, Minister's office 0413 076 213



To explore the systemic issues in the domestic building indemnity/home warranty insurance industry with a view to identifying a competitive home warranty insurance scheme, which is viable in both the short and longer term and provides an appropriate level of protection for homeowners as consumers.


At the recent Ministerial Council of Consumer Affairs meeting, Ministers agreed to explore options to address longer term issues pertaining to consumer protection provided by home warranty insurance.

The Commonwealth, State and Territory Governments will consult with key stakeholders to determine what changes should be recommended to Governments relating to the home warranty insurance schemes.

The terms of reference for the inquiry are:

  • Identify and analyse the appropriateness of the current home warranty insurance schemes in providing appropriate consumer protection by an adequate number of providers in an efficient competitive market
  • Analyse the long term sustainability of the current home warranty insurance schemes (including a comparative analysis of the various States and Territories schemes and other models)
  • Identify those aspects of home warranty insurance which are common to State and Territory based schemes; and
  • Suggest any potential reforms and their costs and benefits which may lead to appropriate consumer protection and greater national uniformity or consistency

The inquiry will:

  • Consult with and invite submissions from State and Territory authorities, consumers, industry, relevant industry and consumer associations, insurers, APRA, and other interested parties.