It is believed that prohibiting insurers indemnify OHS penalties will deter non-compliance as offenders will be forced to face the costly consequences of their actions.
So far only NSW has introduced this prohibition and on 10 June 2020 amendments were made to the Work Health and Safety Act 2011 (NSW). The amendments made it an offence for anyone to enter into, provide, or benefit from insurance or indemnity arrangements for liability of a monetary penalty for any OHS offences. Fines are $125,000 for entering a contract of insurance and $250,000 for anyone who provides or benefits from such insurance. Interestingly there is no prohibition on indemnification of legal costs for PCBUs.
On 22 June 2021 Victoria introduced the Occupational Health and Safety and Other Legislation Amendment Bill 2021 which, if enacted, will prohibit entering, offering to enter or holding an insurance contract indemnifying OHS penalties. There are maximum penalties of $272,610 for businesses and $54,522 for individuals. It remains to be seen whether this will be enacted, but if passed it will come into effect 12 months after Royal Assent.
With the increasing number of OHS prosecutions day by day, we may see more and more jurisdictions implementing these legislative schemes in an effort to put pressure on PCBUs to comply with their safety obligations.
