By law, licensed businesses that build or renovate homes in NSW must buy home building compensation insurance for each project they do over $20,000. They can only buy this insurance from the NSW Government insurer ‘icare’. This means that icare’s decisions about whether and how much insurance a business is eligible to buy has a significant impact on business ability to trade. It is important for this reason that icare handles insurance eligibility decisions fairly and in accordance with the law.
SIRA engaged forensic accountants McGrathNicol to undertake a forensic accounting review of icare’s Home Building Compensation Fund (HBCF) eligibility practices. The review examined records for financial years 2018 to 2022, in relation to 10 businesses who were granted insurance policies. It reviewed icare’s compliance with an approved eligibility model and home building legislation.
The review identified breaches of the Home Building Act 1989 and Insurance Guidelines regarding historical eligibility concessions that were provided to some businesses. These concessions were not in accordance with the icare HBCF Eligibility Manual and icare failed to apply the Manual without discretion.
icare has advised SIRA of action it has taken to address these historical issues and ensure future compliance with its obligations, as well as committing to further enhance its underwriting systems and processes. SIRA considered this response, acknowledging underwriting system and process improvements and no material harm caused and decided to issue icare with a Letter of Compliance.
SIRA has taken proportionate regulatory action and is continuing to monitor compliance against relevant instruments ensuring homeowners are protected. This regulatory outcome demonstrates positive change across the scheme to strengthen underwriting practices and highlights the value in SIRA and icare working constructively.
This supervision action highlights SIRA's commitment to upholding regulatory standards and ensure trust and confidence of the HBCF scheme’s customers.
Further information
Updated 25 July 2025