Australian insurance companies are considering entry into New Zealand's home warranty market following planned building consent reforms, officials have told Parliament.

Michael Warren, MBIE's manager of systems and market policy, told the Transport and Infrastructure Committee on 18 June that international underwriters have expressed interest in the market. "Anecdotally, at a high level, there is interest coming out of Australia to potentially bring new warranty products into New Zealand once the shift [in] liability goes ahead," Warren said.

Warren told MPs that insurance firms from London and Paris are identifying opportunities in the warranty sector across both New Zealand and Australia. "There are positive signs that there is potential increased competition coming in to provide those schemes," he said.

The Government is moving to replace the current joint and several liability framework for building consents with a proportionate liability system. Under the changes, professionals involved in building design will need to carry professional indemnity cover, while new homes up to three storeys and renovations of $100,000 and above will require mandatory warranties.

The warranties will cover defects for one year and structural issues for 10 years. Currently, warranty schemes in New Zealand include the Master Build 10-year Guarantee from the Registered Master Builders Association, Halo 10-year Residential Guarantee from the New Zealand Certified Builders Association, and Stamford Insurance.

Building and Construction Minister Chris Penk told reporters that a couple of private entities have expressed interest in offering warranty products, with at least one being an insurer. Only three entities currently appear to meet the criteria to provide the warranties.

The Government has proposed giving itself authority to temporarily suspend warranty and insurance requirements if adequate market coverage becomes unavailable. In a Cabinet paper, Penk said the suspension provision would address risks to building sector continuity in the event of insurance market disruption.

The amendments on warranty and insurance requirements will proceed through the Building Amendment Bill, which Penk said he hoped would reach Parliament in the coming weeks.