Buildings with non-compliant cladding may not get insurance, industry warns
Buildings with highly flammable non-compliant cladding may not be covered by insurance companies, the industry's peak body has warned as it calls for a national overhaul of construction regulations.
The dangers of aluminium cladding made with a polyethylene (PE) core — used to swathe buildings around the world — was highlighted after a fierce fire ripped through the Grenfell tower in London, killing 80 people.
Planning and fire experts have said there may be more than 5,000 buildings in Victoria that contain non-compliant cladding.
Campbell Fuller from the Insurance Council of Australia said some insurers would now refuse to cover buildings and apartments made with the materials.
"Buildings that do have these flammable materials are certainly going to struggle to get insurance," he told ABC Radio Melbourne.
"So that's sending a pretty strong price signal to the owners of the building and also to the construction industry and the Government that this is an issue that isn't going to go away without a large amount of intervention."
A Senate committee has recommended Australia ban the importation, sale and use of PE cladding, but the ban was not supported by Coalition members.
Mr Fuller said the insurance council wanted a national audit of buildings to uncover the full extent of the problem.
The ABC's Four Corners program revealed Australian suppliers of cladding made with PE knew it was highly flammable a decade before the deadly London fire.
'Human life comes before fast development'
Mr Fuller said the insurance industry was now acting as a "canary in the coal mine", sending a warning to governments, builders and developers on the need to overhaul the entire regulatory system.
The current method of self-regulation was not working and was putting lives at risk, he said.
"It's disappointing we've had the Lacrosse [building] fire in Melbourne, but it's taken the Grenfell fire in the UK for focus to return.
"Developers are always wanting to put things up faster to meet demand. Where, of course, there is unmet housing demand there is always pressure on governments to make sure these things can go up faster, but when human life is compromised, then surely a more prudent approach needs to be taken."
Mr Fuller said ultimate responsibility fell to property owners to inform insurers if the building had the cladding.
"The cost that's passed onto the building owners could be very, very steep," Mr Fuller said.
The Queensland Government has ordered the removal of the material from the Princess Alexandra Hospital, and the Victorian Government has set up a taskforce to investigate the extent of non-compliant cladding on buildings.
Watch Four Corners' report on flammable cladding on ABC iview.