Porter Davis Homes Group became insolvent on 31 March 2023, affecting more than 1,700 homeowners nationally. A Victorian Ombudsman investigation, required by the Legislative Council, later reconstructed what the insurer knew in the weeks beforehand and how the claims that followed were handled. This is what that report found, including the four month old financial review the Ombudsman called a significant misjudgement.
01What happened, and how big it was
The scale is the reason everything else in this article matters.
Porter Davis Homes Group became insolvent on 31 March 2023. In the Ombudsman's words, this "was the biggest builder collapse in Victoria's history, affecting over 1,700 homeowners nationally".
In Victoria, a builder becoming insolvent is one of the few events that opens a Domestic Building Insurance claim. Apartment buildings are Class 2 under the Code, and that label now carries obligations of its own. We have explained the building classification system and what Class 2 triggers. It is a last resort scheme: it responds when a builder has died, disappeared or become insolvent, and it is compulsory on domestic building projects costing more than $16,000. So when Porter Davis stopped trading, more than a thousand households turned to the same insurer at the same time.
"In the six weeks following the Porter Davis collapse, VMIA received more DBI claims than in the entire previous financial year. A quarter of these were lodged in a single day."
That is the context for everything that follows. It is also the fairest thing that can be said about the people who had to handle it.
02The review that finished four months before the collapse
The insurer was not a regulator, but it did look at the books.
VMIA reviewed a builder's financial capacity as part of deciding whether to cover them, which it described as standard insurance underwriting. For large builders it appointed an external consultant to do an independent assessment. It could also review a builder's position at any time.
It did review Porter Davis. The Ombudsman sets out when.
"The last time VMIA began a review of Porter Davis was in July 2022. This review was completed in November 2022, four months before the collapse. This review found that there were concerns about Porter Davis's position, but it was 'moving back towards profitability'."
The Ombudsman does not leave that sitting there. Its assessment is direct: "given Porter Davis collapsed just four months later, it seems that the review finding that Porter Davis was 'moving back towards profitability' was a significant misjudgement."
The report also records the argument on the other side, and it is a real one. "One consideration VMIA had was that acting prematurely may have caused Porter Davis reputational damage, worsening its financial position." An insurer that moves early on a wobbling builder can be the thing that pushes it over.
03The three weeks before, day by day
Reconstructed by the Ombudsman from the insurer's own records.
By early 2023 Porter Davis was in serious trouble. The report records that the builder met the Victorian Treasurer seeking a $25 million loan, and that the Government also spoke to the Commonwealth Bank, its biggest lender. The Ombudsman is explicit that this "was outside of the scope of this investigation, so we did not look into this further", and neither do we.
What is within scope is what the insurer knew, and the dates are stark.
Three weeks of notice, and a number. Not a vague sense that something might happen, but a specific forecast of 1,200 claims, which the insurer itself understood was more than three times anything it had handled before.
The Ombudsman's conclusion on that period is the line the whole report turns on.
"As well as hoping for the best, VMIA should have started planning for the worst sooner. There is no evidence that VMIA conducted a risk or capacity assessment or developed a plan to minimise the impact on homeowners during March 2023."
And immediately after it, in the same paragraph, the qualification that stops this being a simple story. "That said, given the scale of the Porter Davis collapse, and the limitations of preparation for large loss events generally, we do not think a few additional weeks of preparation would have made a material difference in this case."
Both halves are the finding. The insurer waited, hoping the Government or a buyer would step in, and it should have been planning at the same time. It is also probably true that three more weeks of planning would not have changed the outcome for the people waiting.
04What the insurer actually did
The response was substantial. It is worth setting out properly.
On the day and in the weeks after, the insurer activated its large loss response plan, stood up a dedicated Porter Davis team with a response room, daily information sessions and daily reporting, and contacted Treasury and Finance, the Assistant Treasurer's office, the Victorian Building Authority and Consumer Affairs Victoria.
It then set up a dedicated phone number and email address, activated and trained external call centre staff, built a dedicated web page and a Facebook group, and delivered seven information sessions for Porter Davis homeowners. It engaged three law firms to help assess and manage claims, two external providers to carry out building inspections, and media and communications specialists.
One detail is genuinely clever, and worth knowing if you are ever in this position. It engaged former Porter Davis employees, who the report describes as having "deep knowledge of existing defect issues", to help with defect claims on homes already occupied. It also obtained detailed information on every incomplete and defective project from the liquidator, Grant Thornton, to speed up assessment and make it easier for replacement builders to quote. Where homeowners were claiming a deposit back only, it used aerial photography to confirm work had not started.
Where it fell short was in the shape of the machine rather than the effort put into it. The Large Loss Response Guide "was still not finalised and contained some gaps". Call centre staff "used scripted responses which limited their ability to help homeowners with bespoke questions". The law firm staff, "while experienced, were not dedicated claims managers".
And one structural decision shaped how the whole thing felt from the outside: "claims were not assigned to a single claims manager, so a homeowner could speak to a different person at every stage of the process." If you have ever wondered why a claim can feel like it has no owner, that is what it looks like from the inside.
05How the claims actually went
The averages and the outliers tell different stories, and the report says both.
The average claim after the collapse took seven and a half months. Simpler claims, at deposit or frame stage, moved faster. Complex ones, involving later stages of work, multiple units or specialist reports, ran well above the average and some, in the report's words, "dragged on for years".
The report is careful to record that the insurer's average resolution time "has actually been continually decreasing since VMIA began offering DBI in 2010", and calls that improvement "admirable". Averages were getting better while individual long-running claims got no better at all.
There is one decision inside a claim that moved its value more than any other, and it is not obvious from the outside: whether each item was classified as a defect or as incomplete work. Claims for incomplete works are capped at 20 per cent of the original contract value. Claims for defective work are limited only by the total policy cap. We have set that out in full, including what the Ombudsman found about how those decisions were recorded, in what decides a domestic building insurance claim.
"Both before and after the Porter Davis collapse, VMIA achieved a reasonable outcome for most homeowners, getting them 'back on track' and meeting the objectives of the DBI scheme. But for others, especially those living in a home with ongoing defects, the DBI scheme did not live up to its purpose."
VMIA's position is on the record alongside it: it "views its performance in managing DBI differently to the Ombudsman. It does not accept that some homeowners received unfair outcomes, and maintains that all claims were determined in line with DBI policy terms."
Responsibility for Domestic Building Insurance has since transferred to the Building and Plumbing Commission, which is why the Ombudsman's nine recommendations are directed there and to Government rather than to VMIA. All nine were accepted in principle.
06What this means if your builder is in trouble
Drawn from what the investigation found went wrong, not from general advice.
A claim of this kind is decided on documentation. What an assessor can act on is an item that has been located, measured, photographed and tied to the clause or standard it engages, with a stated reason for treating it as defective work rather than work that was simply never done.
Site Inspections prepares the independent defects report that a domestic building insurance claim is built on. Every item measured, photographed and referenced to the clause or standard it engages, with the reasoning written down, in the format an insurer and a rectifying builder can act on.
07Sources
Every quotation in this article comes from the document below.
This article replaced an earlier post on this address which was based on newspaper reporting. That version named individual homeowners and their financial losses, and covered a separate builder. It has been removed rather than corrected, because the sourcing did not meet the standard we apply to everything else on this site.
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