ACE New Zealand has met with the MBIE team responsible for developing the policy framework to support the move to proportionate liability in the building system, as work progresses on legislative changes.
MBIE confirmed it is now working through the legislative drafting of these reforms as part of a broader Building Amendment Bill. The Bill is intended to be introduced in mid‑2026 and progressed ahead of the General Election, bringing the timetable forward from earlier expectations of Q1 2026.
The current plan remains for the legislation to be approved by September, followed by a 12‑month implementation period.
Core policy intent unchanged
MBIE reiterated that the core policy intent underpinning the changes has not shifted: to ensure parties are only financially accountable for the proportion of defective work they are responsible for, while avoiding unnecessary disruption to the existing liability and building consent system.
This principle is particularly significant for engineering consultancies, who can currently face exposure to disproportionate liability in claims, regardless of their level of responsibility.
Focus on professional indemnity insurance settings
A major focus of current work is the development of professional indemnity (PI) insurance requirements for design professionals. MBIE advised it is continuing to test how proposed settings would operate in practice, including through engagement with industry.
The primary legislation is expected to introduce minimum requirements for certain professionals to hold PI insurance for building work valued over $100,000. It will specify:
- What PI insurance must cover
- Disclosure requirements
- Potential suspension mechanisms that could be used to ease requirements during periods of insurance market disruption or “insurance shock”
ACE emphasised the importance of clear, workable insurance settings that reflect how engineering consultancies operate in practice and do not create unintended barriers to delivering services.
Key issues raised by ACE
During the discussion, ACE raised several practical issues relevant to members, including:
- How “design professionals” will be defined in legislation, particularly in relation to the range of work engineering consultancies carry out under the Building Act
- The treatment of insurance run‑off
- Disclosure requirements, including what information consultants can and cannot disclose to clients under their insurance policies
- How certificates of currency are used across the market
These issues are particularly important for firms managing contractual risk, client expectations, and professional obligations across multiple projects and sectors.
Next steps and opportunities for input
MBIE advised that ACE will be kept informed as drafting continues and confirmed there will be opportunities for feedback as the detail is refined. Once introduced, the Bill will also go through a select committee process, providing an opportunity for public submissions.
ACE will continue to engage closely with MBIE as the legislation progresses and will keep members updated on key developments, implications and opportunities to provide input.
If you have questions or want to share insights from your firm to help inform ACE’s engagement on this issue, please email us via letstalk@acenz.org.nz.