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CONSTRUCTION PRACTITIONERS REGISTRATION AMENDMENT REGULATIONS 2002 (NO 1) (NO 25 OF 2002)
2002
LEGISLATIVE ASSEMBLY FOR THE AUSTRALIAN
CAPITAL
TERRITORY
CONSTRUCTION PRACTITIONERS REGISTRATION ACT
1998
CONSTRUCTION PRACTITIONERS REGISTRATION
AMENDMENT REGULATIONS 2002
(No 1)
EXPLANATORY STATEMENT
Circulated by authority of
Simon Corbell MLA
Minister for Planning
AUSTRALIAN
CAPITAL TERRITORY
CONSTRUCTION PRACTITIONERS REGISTRATION
AMENDMENT REGULATIONS 2002 (No 1)
SUBORDINATE LAW No. SL
2002-25
EXPLANATORY STATEMENT
These are amending Regulations. They amend the Construction Practitioners
Registration Regulations 1998 (the “Principal
Regulations”).
The building industry is currently facing a crisis
because of the inability of building certifiers to obtain professional indemnity
insurance with a ten year run-off period.
The Construction
Practitioners Registration Act 1998 and Regulations require building
certifiers to hold professional indemnity insurance that includes automatic
run-of cover for ten years. They cannot be registered without this insurance.
This applies not only in the ACT but also in New South Wales, Victoria and
Queensland. Standard professional indemnity insurance covers claims during the
current period of insurance. Run-off cover applies to claims against former
holders of professional indemnity insurance and is normally available only at
additional cost.
All insurers who previously provided this coverage
around Australia have advised that within the next three months they will no
longer be offering this form of insurance. They argue that it is not profitable
and at odds with all other professional indemnity insurance products.
Additionally, new APRA requirements for insurers make the level of reserves
required for the ten year duration of the policy untenable.At a national forum
on 24 July 2002, it was made clear by the insurers that while they
were all prepared to provide a standard professional indemnity insurance policy
for certifiers, Governments across Australia needed to take immediate action to
remove the 10 year run off requirement.
While there is an impact on
consumer protection, in practice the response is dictated by the actions of the
insurers. Failure to act now would mean that the building industry would
progressively come to a standstill over the next 6 months.
The statistics
on claims against certifiers indicate that the impact would be limited. The
certifier is not usually the person mainly at fault when there are defects in
buildings – this is normally the builder or the structural engineer. Over
the last 15 years the Government has made one major payment in a personal
injuries case. This was at a time when the Government was responsible for
building inspections. The Government also made an ex-gratia payment of about
$15,000 for damage to the footings that provide structural support for a house.
The Government is not aware of any claims that have been made against a private
building certifier since certifiers became responsible for building inspections
in 1999.
Details
Regulation 1 is a formal regulation that gives the name of the
amending regulations.
Regulation 2 is a formal regulation that links the commencement of the
amending Regulations to its notification on the legislation register.
Regulation 3 provides that the regulations amend the Construction
Practitioners Registration Regulations 1998.
Regulation 4 omits from Regulation 5 of the Principal Regulations the
provisions that define the run-off cover (5(3) (e),5(5) and 5(6)), a provision
that limits the excess (5(4) and one that requires approval of the insurer
(5(2)(a)). The cap on the excess was criticised by some insurers. The amount
is the standard excess under present professional indemnity policies. Once the
insurance is standard professional indemnity insurance, a special requirement
for approval by the government is unnecessary.
Regulation 5 makes a cross-reference in Regulation 10 of the Principal
Regulations consistent with the Construction Practitioners Registration Act
1998 as amended in 2001.
Financial
Implications
Nil.