Issue Date:  -  Tuesday, 17 July 2001

Premier announces rescue package after HIH Insurance collapse

Premier Geoff Gallop today announced the State Government's rescue package to help homeowners and the building industry in the wake of the HIH Insurance collapse.

The package, which is expected to cost up to $6 million over two years, will provide cover for homeowners who were insured with HIH Insurance where their builder has become insolvent, died or has disappeared.

Dr Gallop said homeowners could claim a maximum of $100,000 to have their home completed or repaired.

Homeowners who have lodged a valid insurance claim with HIH - but that claim has not been met because of HIH's insolvency - will also be covered by the rescue package.

A number of obstacles to the flow of building work will also be addressed in the package. Problems have arisen where clients or financial institutions have withheld progress payments to builders on the basis that a valid insurance policy is not in place.

These builders can now be reassured that there is no need for them to obtain alternative insurance for the work they have in progress.

The package will also help those builders who had lodged building licence applications with local government authorities before March 15 this year using HIH Insurance certificates and who have not been able to obtain alternative insurance for those particular jobs.

"This Government is committed to protecting consumers and this rescue package is evidence of that commitment," Dr Gallop said.

"A family's home is usually its major purchase. Compulsory indemnity insurance was introduced to protect consumers. This package returns HIH home indemnity insurance holders to the same position they would have been had HIH Insurance not collapsed.

"The building industry has been strongly pressing for relief to help the stagnation of building indemnity insurance approvals by local government councils.

"These measures announced today will go a long way to alleviating the uncertainty and blockages that have been affecting homeowners and the building industry."

Dr Gallop said the rescue package followed detailed consultation with industry and consumers.

He said the Government was keen to fully examine the fallout from the HIH collapse and how this could be addressed in existing and future legislation.

A review of the home indemnity insurance provisions of the Home Building Contracts Act 1991 has been re-opened to examine these issues further. The closing date for submissions is 5pm Friday, July 27.

The Government has already established a financial training package to help builders applying for building indemnity insurance in the wake of the HIH collapse and managed to encourage two new building indemnity insurers into the market.

In terms of workers' compensation, industry agreed in April to a smaller reduction in workers' compensation premiums to fund a five per cent levy to meet the estimated $93 million needed to cover future claims after the HIH collapse.

HIH policy holders who need to make a claim may register immediately with Claire Nutter at the Department of Consumer and Employment Protection on 9282 0723. Processing of claims is expected to commence within six weeks.