Building Surveyors, Quantity Surveyors, Engineers and Building Inspectors (Consultants) must by law have exclusion free Professional Indemnity (PI) insurance in order to be registered (in Victoria – registration is with the Victorian Building Authority) and to be able to practise. The requirement for exclusion free PI insurance applies in Victoria, NSW and QLD.

The last insurer offering an exclusion free PI policy is withdrawing the policy from the market from Monday 1 July 2019. This means the Consultants can no longer obtain the requisite and compulsory insurance. Many Consultants will be required to renew their registrations from 1 July 2019. They will not be able to do so as the compulsory insurance will not be available. In the following weeks / months, more and more Consultants depending on when their registration or policy renewal comes around, will be affected.

The upshot – no insurance = no registration = inability to undertake work.

The ramifications are that Construction sites and projects on the eastern seaboard will shut down as these Consultants are critical to projects being able to be completed yet they will not be able to practise. For example, the Building Surveyor issues the building permit, certifies various stages and critically issues the Occupancy Permit that enables the building to be occupied.

The knock on effect is dramatic – and fairly obvious – if the matter is not immediately addressed – thousands of Construction employees will be out of work, thousands of employees of Consultants will be out of work as Consultancies close (which they are now doing), thousands of Construction related businesses will grind to a halt causing greater unemployment. Suppliers of building products will also be affected. This does not just affect large Developers or Construction companies the greater effect will be felt with – small to medium enterprises – “Mums and Dads” and family businesses which make up the bulk in terms of volume of corporate Australia. As well, the impact will be felt in the residential housing market and the retail, commercial, industrial and infrastructure sectors.

In 2014 – in terms of numbers – AI Group research found – the total Construction Industry activity was valued at $202.5 billion in volume terms. The industry comprised over 330,00 businesses nationwide and directly employed over one million people (around 9% of the workforce). All of these people and business will be affected by the current crisis as will the rest of the Australian economy.

The expiry or withdrawal of PI insurance affects ALL claims and liabilities for defects and not just cladding (which has caused the crisis). This is because the PI insurance policies are “claims made”, thus if the claim is made after the policy expires (even though the circumstances of the claim existed before expiry) – there is (with limited exceptions) NO insurance coverage. This leaves massive exposure and risk to all in the construction industry – Developers, Contractors, Consultants and the Banks as well as purchasers (Mums and Dads), owners and lease holders of properties. The Consultants will need to immediately consider making claims and notifying their insurers before their existing insurance expires so that they are covered.

Finally, as Building Surveyors who are not insured or registered will not be able to issue Occupancy Permits, Banks who have lent billions of dollars on construction projects will be at risk in getting loans repaid. Example – In order to settle the sales of purchases of apartments in a multi unit residential development, you need an Occupancy Permit once construction is completed which allows purchasers to occupy the premises. This will also cause great social and financial dislocation to purchasers who have committed funds and their lives to living in these developments.


That the Federal and State Governments immediately form a Task Force to meet before Friday 5 July 2019 to develop and implement an immediate plan to resolve the crisis. If the State Governments fail or refuse to participate, then the Federal Government must act alone.