Page 21 - Climate Control News Magazine April 2019
P. 21

Residential Air Conditioning
Industry in crisis as insurers withdraw cover for cladding
THE AIR CONDITIONING industry is waiting with bated breath to see if the NSW construction industry can move forward after insurers began withdrawing cover for cladding in the wake of the Lacrosse ruling.
Under the ruling, apartment owners were awarded more than $5.7 million in damages fol- lowing the 2014 flammable cladding-fuelled fire at Melbourne’s Lacrosse building.
The owners launched legal action against builder LU Simon, claiming more than $12 million to cover replacement of non-compliant cladding, damaged property and soaring insurance costs.
In the Victorian Civil and Administrative Tri- bunal, Judge Ted Woodward ordered LU Simon to pay $5,748,233 to the apartment owners.
The ruling led to insurers withdrawing cover for cladding.
In response, accredited certifiers warned that the construction industry will grind to a halt if Professional Indemnity (PI) insurance policies cannot be secured.
The warning comes as insurance brokers, Bo- vill Risk and Insurance Consultants advised that a major insurer of hundreds of certifying firms would no longer be offering PI insurance policies free of exclusions in relation to com- bustible cladding.
For accredited certifiers to maintain their reg- istration, the law in NSW states that they must hold PI insurance policies free of exclusions.
Association of Accredited Certifiers (AAC) CEO, Jill Brookfield said insurers are now shying away from offering insurance cover for cladding to accredited certifiers and fire engineers.
“If accredited certifiers cannot get insurance, they will be unable to maintain their accredita-
tion and projects will not be able to get a building approval, which will result in the industry grind- ing to a halt.
“The overwhelming majority of homes and buildings constructed in NSW use accredited certifiers in the private sector.
“The industry is facing a crisis and this needs to be addressed as a matter of urgency – this is not just an issue which will impact accredited certifi- ers but one that will impact the entire industry.”
The AAC is urging the NSW Government to act decisively and work to encourage more insur- ers into the market.
“We have been highlighting this issue with the NSW Government for two years – this issue cannot wait any longer to be addressed,” Brookfield said.
“To date, the Building Ministers Forum (BFM), has not done enough to address this is- sue – urgent action from government is need- ed. The industry, builders and owners can’t wait for a national solution.”
At the BFM in February Ministers agreed to an in-principle ban on the use of combustible cladding in new construction.
A cost/benefit analysis is being prepared for the next BMF in July, 2019.
At the same time the NSW government an- nounced plans to appoint a new Building Commissioner to oversee and approve con- struction of new multi-storey residential buildings, and ensure building practitioners are competent.
LEFT: Certifiers fear the construction industry will grind to a halt if insurance policies cannot be secured.
BELOW: Lacrosse apartments in Melbourne.
RAMIFICATIONS OF RULING
The Australian Institute of Building Surveyors (AIBS) has released a summary of the Lacrosse judgement to help members understand the key findings and ramifications.
Prepared by Kelledy Jones Lawyers, the summary describes the judgement as a cautionary tale for building surveyors working on large scale projects.
In the decision, the Victorian Civil and Administrative Tribunal (“VCAT”) was asked to apportion liability for the fire between eight respondents including, the builder, a building surveyor firm, the architects who designed the building and a fire engineer involved in the design of the Lacrosse.
CLIMATE CONTROL NEWS
APRIL 2019
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