Giving Consumers Certainty in an Uncertain Environment, Latent Defect Insurance

#62 Live Panel: A Partnership to Boost Consumer Confidence, Latent Defect Insurance

The Urban.com.au Market Insights Live Event Gold Coast recently featured a compelling discussion on a rapidly changing real estate market, consumer confidence is paramount. Urban.com.au CEO Mike Bird recently sat down with Corey Nuget from Resilience Insurance to discuss how their innovative insurance product is providing a new level of certainty for off-the-plan buyers, particularly in Queensland. This collaboration aims to educate consumers about latent defects insurance (LDI), an offering that could transform the off-the-plan market by giving buyers peace of mind and developers a competitive edge.

Mike Bird's first encounter with Resilience Insurance occurred during a visit to Sydney, where he was impressed by a developer's outstanding success in a highly competitive precinct. When Bird inquired about the key factors behind their performance, he was introduced to the concept of latent defects insurance—an area in which Resilience Insurance is pioneering in Australia.

While LDI is still relatively unknown in Australia, it has a 70-year history overseas, offering a decade of coverage for structural issues post-completion. In the context of New South Wales, consumer awareness of such products is on the rise, making the introduction of LDI by Resilience Insurance particularly timely.

Consumer Demand for Security

Urban.com.au conducted a national survey targeting 5,000 potential off-the-plan buyers to gauge their understanding and interest in LDI. The findings were compelling: despite limited awareness, 75% of respondents indicated they would be willing to pay 1.5% more for a 10-year defects coverage. This statistic underscores a growing demand for greater security in off-the-plan purchases, especially in an environment where consumer confidence is low.

The study revealed that buyers are increasingly concerned about the developer and builder’s reputation, which significantly influences their purchasing decisions. The introduction of LDI not only addresses these concerns but also presents an opportunity for developers to differentiate themselves from the competition.

Resilience Insurance: A New Approach to Building Certainty

Corey Nuget elaborated on how Resilience Insurance is revolutionising the Australian market. The company’s approach involves partnering with builders and developers from the outset, providing an independent quality assurance (QA) service throughout the construction process. This QA service ensures that projects meet high standards, backed by a 10-year insurance policy covering the full building value for structural issues.

The product has already gained traction in New South Wales, where it has been selectively offered to high-quality developers and builders. This selectiveness is crucial, as Resilience Insurance aims to maintain a robust risk management strategy by only insuring projects that meet their rigorous standards.

Expanding into Queensland

Having established a strong presence in New South Wales, Resilience Insurance is now expanding into Queensland. The company is actively seeking partnerships with developers and builders who share their commitment to quality and consumer protection. By doing so, they hope to replicate the success seen in New South Wales, where the presence of LDI has become a key selling point for off-the-plan properties.

For developers in Queensland, adopting LDI could be the deciding factor for buyers choosing between competing projects. As Mike Bird pointed out, "If one builder can offer LDI and another can’t, that’s a meaningful difference for consumers."

A Win-Win for the Industry

The partnership between development teams and Resilience Insurance is set to elevate the standards of off-the-plan developments. By offering LDI, developers not only enhance their value proposition but also contribute to restoring consumer confidence in a market that has faced significant challenges.

As Resilience Insurance continues its expansion into Queensland, the collaboration with Urban.com.au will play a crucial role in educating buyers about the benefits of LDI. This, in turn, will help foster a more secure and trustworthy market for all stakeholders involved.