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.