We predict that the widespread use of combustible cladding on the exterior of high rise and commercial buildings in Australia will create difficulties for property, public liability and professional indemnity insurers in 2018.
Regulatory audits to identify buildings with unsafe cladding are well advanced in most Australian states, with the results of those audits expected to start being released in early 2018. Where unsafe cladding is detected, building owners, particularly strata corporations for high rise residential towers, will be looking to claim cladding replacement costs from the builders, design consultants and certifiers involved in the design and construction of the buildings.
The property and public liability insurers of such buildings will face an increased risks of claims until the cladding is replaced. There will also be increased claims by building professionals under their professional indemnity policies.
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