How can anyone believe that HOW helps???

The Last Resort Home Builders Warranty Insurance Senate Inquiry report was tabled this week. It’s helped me see the light. All this time I was thinking that HOW was an expensive impost that helps only a tiny minority of consumers leaving the rest of us without accessible protection. Now I see it will be Sunny Day or similar, the insurance that’s an expensive impost…etc etc.

Who’s happy about the final HOW report?

(See a summary of the recommendations here.)

The Sydney Morning Herald says that the “the inquiry of the six-month Senate report has angered consumer groups, builders’ activist groups and the Greens, which tabled a scathing dissenting report in Parliament yesterday.”

It reports that “the builder who campaigned for the inquiry, Phil Dwyer, said none of the views and experiences of the public and building community were reflected in the final report, making the insurance providers and the main broker, the Housing Industry Association, the only winners…The inquiry has made a mockery of consumer protection,” Dwyer said.

(The Age reports that “while consumers are struggling financially to bring claims forward, insurers have made millions. Questions in NSW Parliament in June revealed that insurers in NSW reaped about $45.4 million last year from the scheme, but had paid out just $16 million in its six years.)

Greens Deputy Leader Christine Milne said that “The mandatory Builders’ Warranty Insurance system is fundamentally flawed and must be completely overhauled to provide real protection for both builders and consumers. I simply cannot explain why the Government and Opposition decided to ignore the overwhelming evidence and recommend only cosmetic changes to the system.

Milne went on to recommend that:

1.Australia should adopt a national approach (through COAG by January 2010) based on the Queensland model, which has superior dispute resolution, better defect repair provisions, and appropriate registration of builders;

2.Between today and January 2010, the insurance should be made voluntary;

3.Any form of Home Warranty Insurance in the future should be included in the National Claims and Policies Database; and

4.Any loopholes that remain in Commonwealth regulation, such as exempting the insurance from oversight by APRA, ACCC and ASIC, should be immediately closed.

Senate Committee member Senator Gavin Marshall says in additional comments to the report that:

“Last resort insurance has been described as “junk insurance” by many commentators. Whilst the insurance industry disputes this label, what they don’t dispute is that few would purchase this insurance if it were not mandatory to do so.

“On the whole I agree with the direction of the report and its recommendations. However, of the four recommendations, I believe recommendation two does not go far enough. I have been convinced over the course of this inquiry that the committee should be recommending a nation-wide adoption of a form of Home Warranty Insurance that reflects the form currently in effect in Queensland.

“It is my view that the Federal Government should take a leadership role on this issue and progress a Home Warranty Insurance model through COAG using the current Queensland model as a template, Marshall wrote.

I couldn’t agree more with the sentiments above. As a consumer forced to sue her builder, and threaten to wind him up in order to even have a sniff at activating my HOW insurance (he paid up on the deadline day before I needed to take this step), I am irate that the system we have is mandatory, expensive, and ultimately delivers so little. (Check out this run down on what HOW does for you. It’s short believe me.)

Tagged as: Home Owners Warranty insurance