A watchdog has lifted the lid on aggression and abuse home owners and state insurance staff faced following the collapse of a major builder.
In a report tabled in Victorian parliament on Wednesday, the state ombudsman critiqued the Victorian Managed Insurance Authority's handling of claims after Porter Davis went belly up in March 2023.
It was the biggest builder insolvency in Victorian history and left more than 1700 home owners in limbo nationally.
The Victorian authority oversaw the domestic builder insurance scheme, covering claims for incomplete or defective work when a builder dies, disappears or becomes insolvent.
Porter Davis' collapse lead to "unprecedented demand", with the body scaling up the use of law firms to help its team of 12 full-time staff process claims.
Most home owners didn't face unreasonable delays but those that did endured serious personal and financial hardship, the ombudsman found.
"One home owner described their experience as a 'double catastrophe'," Victorian Ombudsman Marlo Baragwanath said.
The ombudsman investigation exposed team chats and emails that showed staff dismissing home owners concerns and using inappropriate language.
One message read: "im (sic) on fire today, called a C*** owner at 8.15 this morning, put her in her place."
Another employee said "hate them all" and a third relished waking up an owner to discuss a "stupid effen query".
Opposition Leader Jess Wilson said the attitude and language was "disgraceful".
"What we saw from the (authority) was a culture of legalling people, bullying people into submission," she said.
Finance Minister Danny Pearson apologised on behalf of the government and said he had contacted the authority's chief executive to stress the language was unacceptable.
Staff sometimes felt home owners were "gaming the system" with deliberately inflated quotes but there was no evidence of it.
The report acknowledged employees received abusive emails and calls, as well as credible threats of violence.
The body's office closed and there were instances "digital stalking" to locate staff on social media and contact them directly.
"The combined stressors of an intense workload, high expectations and difficult behaviour from some home owners impacted the attitude that some (authority) staff had toward home owners," the report said.
The authority, which no longer manages the scheme following the creation of Victoria's building and plumbing commission, said it worked hard on claims but "was not perfect".
"For those few where we did not do well enough, we are sorry," it said.
The ombudsman made nine recommendations, centred on improving the processes, strengthening communication and increasing overall transparency.
All were accepted in principle.
About 560 Porter Davis clients were not covered under the state scheme despite paying the construction giant before it collapsed.
It forced the state government to set up a separate $15 million rescue package and create laws to fine builders who fail to take out domestic building insurance.
