VMIA to Increase DBI Fees: So, What Now?

According to the Master Builders Victoria, they have received advise that the VMIA or Victorian Managed Insurance Authority has announced a significant increase in their DBI fees.

Starting September 1st this year, DBI or Domestic Building Insurance will increase its fees by 43%, which has been said to be a result of not just the inflation rates, but the growing claims exposure.

So, what now?

In addition to the recent announcement, builders are reminded that they are required to purchase and hand out clients the copy of the DBI policy before any requests for money is made - this includes the downpayment. Failure to do so is considered and offence.

The ongoing changes and challenges in the industry involving shortages in skill, trade, supply, not to mention the price increases have made it difficult for builders to manage cash flow. MBV have made a few suggestions on how to handle this increase.

MBV adds, "Certificates in a BuildVic cart that are not purchased before 5pm on 31 August 2023 will be withdrawn. Any referred certificates will be assessed by the Builder Assessment Team by Thursday, 24 August 2023."

Furthermore, MBV advises that in order to facilitate a smooth transition to the new rates, "any COI applications for certificates that you wish to have processed under the existing rates must be received and quoted by Monday 21 August 2023 with payment to be received prior to Wednesday 23 August 2023 If you are unable to submit your application to us by this date, you may be charged the new rate

Unfortunately, there is no grace period for the new proposes premium/rates. The new rates will apply on or before September 1st.

How is this going to affect consumers?

Experts warn consumers about the increased construction costs due to the DBI fees increase. And because of this, affordability issues could arise, thus, making it more challenging for consumers to enter the property market or push through with potential renovations.

How is this going to affect the building industry as a whole?

There is a huge probability of reduced profit margins because builders as well as contractors will have to face increases in expenses because of the higher insurance premiums. Some structures will have to be adjusted and in order to maintain higher profability, builders may need to negotiate higher contract.

Small builders in particular will also need to prepare for future effects of this increase.

Experts are seeing slower construction activity due to this significant change. Because of the higher insurance costs, it may discourage new construction projects and at the same time, there is also that possibility of higher house prices.

The BuildVic portal can still be utilised to check the current premium pricing.

For queries and clarifications, it's important to talk to your insurance broker or alternatively, contact the MBV team.

Updated: July 14th 2023.