Building regulations in NSW are undergoing a major revision with implications for insurers and brokers. In August, the Minns Government released the Building Commission’s NSW draft Building Bill for comment. The consultation period ended in October.
The new legislation is expected to be released in the coming months. However, the recent appointment of a new Building Commissioner, James Sherrard, may impact the timing of the release and the bill’s content.
Whatever happens, the new bill involves a massive process of consolidation by combining, modifying and streamlining nine original Acts into one.
“The master plan here is to have better buildings and boost consumer confidence, so that’s registration, licensing and insurance requirements for all levels of the building industry,” said Simon Gray (pictured above left), practice leader in Bellrock’s construction advisory division.
Some stakeholders have described this bill in epic, Lord of the Rings terms. Instead of the “One Ring to rule them all”, however, there is a single bill to rule them all, following this consolidation and streamlining of nine Acts into one.
Gray and Bellrock colleague, senior adviser Carina Bogaard (pictured above right), told Insurance Business that insurers and brokers can expect some changes. They also said it’s important for insurance stakeholders to watch this evolving draft document because there could still be changes to come.
“In its current form, as we understand it, there will just be an obligation that all the professionals working on buildings in NSW will need to carry appropriate insurance,” said Bogaard.
She said the current draft of the bill doesn’t define that in exact terms.
Bogaard and Gray said insurers and brokers shouldn’t see too many changes apart from the fitness for purpose requirement.
However, she said this clause may change again before the final Bill version is released.
Gray said other issues could arise around how the Act treats contractors and professionals. He said this has always been a bit of a grey area.
“Essentially, contractors are currently required to have public liability insurance and the professionals have professional indemnity (PI) and public liability,” he said. “Professionals are the architects and the engineers but the ‘tradies’, or contractors, might also be forced to effectively get PI insurance.”
Gray expected insurers to accommodate these changes.
“It’s not a big issue, but in terms of impacts for insurers we might be seeing more PI policies for the smaller end of town coming out of this for the different trades,” he said.
However, at this stage, Gray and Bogaard said this change is industry speculation and there’s no confirmation that contractors will be placed under this new insurance obligation.
The Bill also aims to raise professional standards and training, including for industry participants that, until now, have not come under as many obligations.
“One of the things that the building Bill suggests is that there will be registration across all professions, rather than just a select few and that will come with the obligation to continue keeping up with training and keeping across various changes in the industry,” said Bogaard.
Currently, she said, only architects and engineers are required to be registered and licensed. The bill proposes extending that to other professions and trades for the first time, including plumbers and electricians, but also building designers and interior designers.
“So it means consumers can feel more confident that those working on their project will be better qualified,” said Bogaard.
Bogaard said consumer groups are generally happy with the draft legislation but some professions have expressed concerns.
For example, she said, architects are worried about having their separate Act folded into the new bill. One of their issues, she said, is that building designers, who don’t necessarily have equal qualifications to architects, will be registered in the same way.
Another concern for architects: “In its current form, the new Act has no definition of design,” said Bogaard. “Design is a very broad concept and architects use a holistic approach when they talk about it.”
Bogaard said the new legislation obliges other professions involved in the building process, like certifiers, to be more involved.
“There’ll be a requirement for them to come in at various stages of the building to inspect and to sign off,” she said. “So their obligation will increase in terms of the amount of time they need to spend on a specific project.”
However, water proofers will also have more responsibility, which will offer some relief for certifiers.
Water proofers, she said, will have to provide a certificate of compliance to the certifier before they can sign off.
Are you an insurance professional in the construction sector? How do you see the NSW draft Building Bill impacting your work? Please tell us below.
