One of the world's biggest and oldest insurers is underwriting a new building warranty insurance scheme being launched in New Zealand.
Duncan Colebrook, of Auckland's Stamford Insurance, said the 325-year-old Lloyd's of London was behind the new scheme which he hopes will capture about 15,000 houses annually, or around half the new-build market.
Colebrook said he had been an insurance broker for nearly 40 years, migrated from Britain three years ago but was horrified by our leaky building crisis and is pitching his scheme towards developers and builders, not home-owners.
"Most of New Zealand's builders presently use the Master Build Guarantee, but ours is an insurance policy issued by Lloyd's, an insurer licensed in New Zealand with an 'A' rating which means it has substantial reserves. Our 10-year policy will be honoured for the full 10 years and backed by Lloyd's," he said.
Lloyd's announced a profit before tax of 3.2 billion ($6.1 billion) for the year to December 31, 2013.
Colebrook said the insurance would protect against defects due to design or specification, meet the costs of alternative accommodation if a place has to undergo major repairs, give technical advice and a professional claims management service.
Structural defects include weathertightness.
Colebrook said a house of around $300,000 would cost around $2200 to insure under the scheme and "right now, we're looking at [possibly] hundreds of apartments", he said, naming a list of clients.
The scheme was similar to those operating in Britain for many years.
"Because we are insurance professionals, we approach the market with a very different perspective," Cole-brook said.
Asked about exposure to the leaky building crisis, Colebrook said risk would be balanced with reward.
"It's all about trying to control the front end by carefully selecting builders and ensuring certain things happen," he said.
Auckland lawyer Adina Thorn said the Master Build Guarantee had been the subject of concern for a number of reasons.
"On closer analysis, the cover from these types of policies is far more limited than might appear. The difficulty is that really the insurer holds most of the information," she said.
But the Master Build Guarantee claims it is New Zealand's leader, backed by more than 100,000 houses and renovations since 1991.
"We have the largest and the most competitive range of guarantee products in the market. Our guarantees are the most comprehensive products available and only a Registered Master Builder can offer them to you," says the Registered Master Builders Association of New Zealand.