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CBS offers builders guarantee

Contributor:
Fuseworks Media
Fuseworks Media

Help is at hand for residential builders fearing the worst after the loss of vital insurance.

Hot on the heels of the withdrawal by Lloyd’s of London from the New Zealand market for builders guarantees a locally-owned insurance agency is launching a new one.

Builtin, a boutique insurance agency, specialises in construction insurance and builders guarantees. One of their customers, the fast-growing Combined Building Supplies Co-Operative (CBS), offers the policy for its membership of nearly 250 residential building firms.

Last week the New Zealand Certified Builders Association announced it had stopped issuing its Halo Residential Guarantee, effective immediately. This on the back of losing their underwriter, a Lloyd’s of London syndicate, which has pulled out of the market globally.

The Lloyd’s withdrawal has also affected New Zealand’s only other insurance-backed builders guarantee, Stamford Insurance’s 10-year warranty, and the Master Build Guarantee, which is only available from members of that association.

CBS chairman Carl Taylor said the Builtin policy provided exactly the sort of protection and assurance the industry needed.

"For builders like myself it’s pure gold."

CBS, established in April 2018, has plenty to offer building firms. Members pay a one-off membership of $1000, compared to $2750 plus GST annually at Master Builders.

"And on top of that at CBS you get great savings on supplies, as well as an insurance policy as good as any in the market," Taylor said.

Builtin marketing manager Ben Rickard described its policy as "a real alternative for homeowners who want to use a builder that is not a member of the Registered Master Builders Association, but also want, or need if their lender requires it, the reassurance of an independent, third party guarantee. An independent guarantee assures them that the home they have paid for will be completed at the agreed price and will be free of defects."

Builtin’s builders guarantee programme is open to residential building companies with a solid financial position, a good track record and robust construction management and quality control processes.

"We’ve been able to ensure an almost seamless transition for all our existing accredited builders onto the new policy, meaning that there is no interruption to their business or the cover they can offer their clients."

Builtin are also extending an open invitation to members of NZ Certified Builders to join their new guarantee programme. "Having promised their customers that as a condition of membership they must supply a 10 year builders guarantee, only to have it taken away, we are pleased to be able to offer Certified Builders an alternative, allowing them to provide guarantees to those clients they have promised them to."

Having specialised in construction insurance and builders guarantees for more than 20 years Builtin are no strangers to the whims of the insurance market. They and many of their customers were affected by the shock collapse of CBL Insurance in 2018, an A-rated, licensed insurer that was a leading player in the market for builders guarantees both here and internationally.

Builtin began their search when it became clear that Lloyd’s was no longer interested in underwriting builders guarantees. It led them to Southern Pacific Insurance Corporation (SOPAC), a US regulated corporation that specialises in construction bonds and performance guarantees. Rob Harrison, Underwriting Director at SOPAC said the company sees significant growth potential in the New Zealand market, where he said "there is a chronic shortage of housing stock.

By all accounts only half of all new residential construction is covered by an independent guarantee in New Zealand, so there’s an opportunity to substantially grow the market. Now, with Lloyd’s withdrawal having left Master Builders as the only option in the market our entry, in partnership with Builtin, is really great timing, as it means builders and homeowners will still have a choice".

Builders interested in joining Builtin’s programme can request accreditation at: https://builtininsurance.co.nz/10-year-guarantee/

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