Currently many large-scaled foreign insurance companies have developed related Inherent Defect Insurance (IDI) products. Nevertheless, the exposures of quality defects in buildings are increasing due to continuous innovation in design, new materials being applied, design changes in course of construction, new construction methodologies being adopted, revision of building regulation and shortened construction period.
Japan, the neighboring country, established Housing Quality Assurance Act in April 2004, which requires essential housing mechanism to be compliance with building codes at least, the builders required to own legal responsibility and to be obliged to the defects of essential structures found within one decade as well. In considering of risk diversification and urged by Construction Industry, IDI was therefore initiated and developed. Following Japan, China, the other neighboring county, began to draft and establish related laws aggressively and take effective precautionary measures sincetheir awareness having been raised to the building defects by frequent and many disputes in housing quality as well
In Taiwan area, in August 1997 Lincoln Community retaining walls failed, 28 people were killed and more than one hundred residents were homeless since their houses were completely destroyed. Dongxing Building collapsed in 921 Earthquake, 73 people were and 14 missing. Both lessons-learnt were caused by building defects. Therefore, how to develop and implement IDI in order to enhance building quality is of great urgency.
This study is to explore the coverage of IDI, the current IDI development in various countries, major loss records and the problems to be tackled in Taiwan. We conclude three suggestions. First, IDI is suggested as a compulsory insurance. Secondly, to shorten the transition period of promoting IDI is required in order to alleviate the possible suffering when benchmarking global experience. Thirdly, to implement Technical Inspection Services are essential in building risk management.