A client recently had their annual review for their Builders Warranty Insurance and provided the requested documentation and information to the insurer. Due to the ongoing challenges within the building industry seen over the last few years, the client’s margins were viewed as slim and did not look favourable to the insurer on the initial viewing.
As a result, the insurer placed a restriction on the facility, halting certificates, and new work. They also provided terms that halved our client’s current annual limit and requested a capital injection of over $300,000 to satisfy their requirements.
Due to this outcome, our client was unable to start any new work, and had no way to provide a capital injection of that size in the short time frames outlined by the insurer. Our client proceeded to tell us that he would be calling his accountant to draft up the documentation to place his busi- ness into liquidation, as he thought that this was his only option.
After considerable discussion with the client, we initiated a meeting with him and his accountant and were able to talk through the documents that had been provided to insurer. We discovered that the accountant had not reported the information correctly and had overlooked a large portion of the business income and assets.
The accountant reviewed all the financial statements and documentation, providing updated versions that were then resubmitted to the insurer for review.
The insurer was happy with our client’s updated and correct financial reporting, and provided revised terms for the facility which included a rollover of his annual limit, and no facility restriction meaning we could start issuing certificates again.
