In 2023, Porter Davis and other homebuilder insolvencies exposed widespread non-compliance with Victoria's compulsory Domestic Building Insurance (DBI) scheme under the Allan Labor Government.
This resulted in hundreds of Victorian homebuyers facing the loss of hard-earned deposits or hundreds of thousands of dollars in additional building costs at no fault of their own.
Following a successful Liberals and Nationals Legislative Council referral in June last year, the Victorian Ombudsman investigated the matter and has today released the Management of Domestic Building Insurance Claims by VMIA report, which has found:
- The Victorian Managed Insurance Authority (VMIA) had not taken adequate steps to prepare for large building insolvencies
- The VMIA's communication with homeowners was inadequate and lacked transparency.
- The VMIA's dispute handling processes and practices met VMIA's legislative obligations but were not always fair and reasonable.
- In instances where significant delays in DBI claims occurred, the process caused unreasonable personal and financial hardship for people.
This comes after the VMIA's Annual Report 2024-25 revealed failed management of the Domestic Building Insurance (DBI) portfolio required a taxpayer bailout of $590 million when DBI was transferred to the new Building and Plumbing Commission because the DBI portfolio liabilities were $695 million.
This is more evidence of financial incompetency under the Allan Labor Government, highlighting a fundamental failure of the State's insurer in risk pricing and ability to manage a mandated consumer protection product.
In May this year the Auditor-General's Domestic Building Insurance report found that VMIA could improve its claims processes, transparency and performance monitoring and stating that DBI's financial position deteriorated sharply from 2022-23, mainly due to claims doubling on the previous year.
The report also exposed instances of highly disrespectful and inappropriate commentary made by the VMIA's employees towards insolvency victims who were simply seeking to have their cases resolved.
Deputy Leader of the Opposition in Legislative Council, Evan Mulholland, said: "This report lays bare the unreasonable distress and hardship suffered by homebuyers as a consequence of Labor's mismanagement.
"Under Labor, the system has failed Victorian homebuyers twice over. No family or homebuyer should've been put through such a bureaucratic nightmare when their house and financial future was on the line."
Shadow Minister for Finance, Bridget Vallence, said: "Today's Ombudsman report exposes the financial incompetence of the VMIA and its complete disrespect for Victorian homeowners at their time of need."
"The Allan Labor Government must come clean about how the VMIA got the risk pricing on domestic building so wrong, leaving impacted homeowners suffering distress and financial hardship.
"VMIA's mismanagement has added to the financial and emotion toll for homebuyers who found themselves exposed at no fault of their own. Victorians deserve better."
