Compulsory building insurance premiums are poised to be hiked as Victorian claims soar after the collapse of construction giant Porter Davis and last year’s devastating floods.
In state budget estimates on Monday, Victorian Managed Insurance Authority executive officer Andrew Davies indicated the number of domestic building insurance (DBI) claims is expected to double this financial year.
Between 1700 and 2000 claims are made in a typical 12 months but that number is forecast to be more than 4000 after Porter Davis collapsed in late March.
“With that insolvency alone we have currently had in excess of 1700 additional claims to what an ordinary year would be,“ Mr Davies told the Public Accounts and Estimates Committee.
The state insurer expects to field up to 2500 claims from Porter Davis customers, including 1300 for incomplete homes.
Mr Davies acknowledged the claims rise is likely to double the total insurance payout from $77.1 million last financial year, when the authority posted a $249.2m deficit.
“Claims have been quite challenging. We’ve had two very large events. The October floods and indeed the Porter Davis activity. They will have a material impact on our result,“ he said.
The riskier environment will prompt an increase in insurance premiums but an exact figure is not yet settled, Mr Davies said.
The average premium is between $1200 to $1300, comparatively low to other states and territories, he said.
But opposition home ownership and housing affordability spokeswoman Jess Wilson said the premium hike would mean higher housing costs and less supply.
“Another cost hike in the form of DBI premium increases will put builders further under strain and this will flow through to Victorian home buyers and further risks for consumers,“ she said.
