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Financial sustainability

The reforms aim to ensure that premiums and other changes are adequate to cover risks to homeowners.

Financial sustainability will be improved by:

  • giving us (the regulator) the authority to assess and approve premiums, or reject premiums deemed inadequate, excessive or otherwise not in accordance with the relevant guidelines
  • allowing private sector providers to enter the market to encourage product innovation, choice and competition
  • introducing the split cover option to allow for increased coverage for homeowners and better risk management
  • allowing premiums to be calculated according to a builder’s individual level of risk
  • establishing an operational fund for administrative costs
  • establishing the Home Building Insurers Guarantee Fund as a safety net in case of provider insolvency
  • a government funding injection

The reforms will complement changes made by the current home building compensation provider, icare hbcf, which introduced risk-based pricing, removed broker commissions and started raising premiums to cover expected costs in April 2017.