The insurance product giving Australian property buyers surety
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The insurance product giving Australian property buyers surety

Property is a key pathway to wealth. A new product ensures you get what you paid for.

By Corey Nugent, CEO Resilience Insurance
Fri, Sep 22, 2023 10:02amGrey Clock 4 min

Following significant building industry reforms in NSW in recent years, the insurance industry has entered the apartment sector, offering insurance on quality building projects, for quality trustworthy producers.  As the NSW Government under the administration of the Office of NSW Building Commissioner leads building regulatory change, the need for commercial solutions supporting consumers and those trusted building practitioners could not be timelier.  Enter Latent Defects Insurance (LDI).  Here’s what you need to know about this game changing product.

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What is Latent Defects Insurance?

Latent Defects Insurance (LDI)is an insurance product available around the world for decades but only now available in Australia.  It provides insurance protection for structural defects and waterproofing defects in apartment buildings for a period of 10 years after completion of construction. This is a protection unavailable to consumers or industry previously, and it provides unequalled consumer confidence in the quality of building for purchasers while eliminating the destructive and growing litigation business model operating across the construction industry.

Why would an insurer offer this cover given the stories of poor building?

LDI changes the way building insurance is offered.  Rather than reliance on history and in house certification, LDI requires a developer and builder to employ an independent inspection service all the way through construction. This inspection service must be approved by the insurer and the scope of inspections agreed before construction commences.  The inspection program is detailed and includes design review, construction inspection, waterproofing inspection and testing among many aspects of assurance.  This gives the insurer, the construction participants, and consumers much greater surety of compliance with standards and codes, safety, and delivery, enabling an insurance security to be offered after completion of the building project.

Won’t this insurance only add to the already strained affordability pressures?

No.  In NSW, a developer is required to provide a 2 percent financial bond to NSW Fair Trading at completion securing the quality of building for a period of two years.  This cost, the 2 percent bond is charged to the construction cost and therefore onto the purchaser of units.  If that bond is returned to the developer at the end of two years, it is rarely if ever passed back to those purchasers.  LDI is an alternative to the Strata Bond, meaning that the developer has a choice of providing the two-year bond or a 10-year insurance policy.  The current experience for the cost of the LDI product is it is priced at approximately 1.5 percent.  This means LDI is in fact cheaper than the current bond and reduces the impost on purchasers.

How does this benefit consumers and the building industry?

Latent Defects is a 10-year insurance cover with cover at the building value or $50 million.  The strata bond is a two-year protection valued at 2 percent of the cost of building. The limitations on the value and time offered by the strata bond are and have been catastrophic for many consumers.  It also brings about significant litigation risk for developers, builders, and financiers.  Latent Defects Insurance is offered on a strict liability basis.  That means there is no need to find fault to enable a claim, eradicating the litigation business model that costs all participants tens and often hundreds of thousands of dollars and many years of time and frustration.

Why would a developer not elect to purchase Latent Defects Insurance?

The product is only new to Australia, being offered in the open market in the past 12-months.  Resilience Insurance is the first to offer this product.  The insurance is offered selectively to developers and builders with quality building histories meaning those with a history of association to consumer harms or poor quality outputs will either not be able to obtain the cover.  Other developers have relied on the return of the 2 percent bond in their own profitability models, taking that benefit to their business returns over tangible, transparent delivery and security in favour of their clients. 

How do you ensure your property is protected by Latent Defects Insurance

Prospective purchasers should be asking their developer in the sales display suite if their property will have Latent Defects Insurance.  There is already strong evidence and media reporting of consumers moving purchase decisions on this exact point.  Ask your developer and their agents if you are getting a property with  two years limited protection or 10 years full insurance protection.  For developers, the security provided means that the risk of litigation is eliminated.

CEO of Resilience Insurance, Corey Nugent

CEO of Resilience Insurance, Corey Nugent says:

Latent Defects Insurance is a vital protection for consumers and building practitioners changing the way building outputs are overseen and delivered.  Ensuring quality and backing that product with full insurance protection enables apartment buyers to have confidence in their investment, without the fear of catastrophic future exposures.

Supporting the significant and necessary regulatory reform in NSW, Resilience Insurance has been able to offer this product benefiting confidence, transparency and trust in quality building product.  Providing insurance protection for the benefit of apartment owners, removing the litigation risk for building industry participants and ensuring our apartment buildings are delivered to a quality benchmark are just some of the benefits of Latent Defects Insurance.



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Wild cities and concrete corridors: How AI is reimagining the landscape

A new AI-driven account by leading landscape architect Jon Hazelwood pushes the boundaries on the role of ‘complex nature’ in the future of our cities

By Robyn Willis
Wed, Dec 6, 2023 2 min

Drifts of ground cover plants and wildflowers along the steps of the Sydney Opera House, traffic obscured by meadow-like planting and kangaroos pausing on city streets.

This is the way our cities could be, as imagined by landscape architect Jon Hazelwood, principal at multi-disciplinary architectural firm Hassell. He has been exploring the possibilities of rewilding urban spaces using AI for his Instagram account, Naturopolis_ai with visually arresting outcomes.

“It took me a few weeks to get interesting results,” he said. “I really like the ephemeral nature of the images — you will never see it again and none of those plants are real. 

“The AI engine makes an approximation of a grevillea.”

Hazelwood chose some of the most iconic locations in Australia, including the Sydney Opera House and the Harbour Bridge, as well as international cities such as Paris and London, to demonstrate the impact of untamed green spaces on streetscapes, plazas and public space.

He said he hopes to provoke a conversation about the artificial separation between our cities and the broader environment, exploring ways to break down the barriers and promote biodiversity.

“A lot of the planning (for public spaces) is very limited,” Hazelwood said. “There are 110,000 species of plants in Australia and we probably use about 12 in our (public) planting schemes. 

“Often it’s for practical reasons because they’re tough and drought tolerant — but it’s not the whole story.”

Hazelwood pointed to the work of UK landscape architect Prof Nigel Dunnett, who has championed wild garden design in urban spaces. He has drawn interest in recent years for his work transforming the brutalist apartment block at the Barbican in London into a meadow-like environment with diverse plantings of grasses and perennials.

Hazelwood said it is this kind of ‘complex nature’ that is required for cities to thrive into the future, but it can be hard to convince planners and developers of the benefits.

“We have been doing a lot of work on how we get complex nature because complexity of species drives biodiversity,” he said. 

“But when we try to propose the space the questions are: how are we going to maintain it? Where is the lawn?

“A lot of our work is demonstrating you can get those things and still provide a complex environment.” 

At the moment, Hassell together with the University of Melbourne is trialling options at the Hills Showground Metro Station in Sydney, where the remaining ground level planting has been replaced with more than 100 different species of plants and flowers to encourage diversity without the need for regular maintenance. But more needs to be done, Hazelwood said.

“It needs bottom-up change,” he said. ““There is work being done at government level around nature positive cities, but equally there needs to be changes in the range of plants that nurseries grow, and in the way our city landscapes are maintained and managed.”

And there’s no AI option for that. 

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