Section 272A: WHS Ban on Insurance for Penalties

Regulatory citation: Model Work Health and Safety Act, Section 272A, No insurance or other indemnity against penalties (with section 272B, Liability of officers)

What Is Section 272A?

Section 272A of the model WHS Act makes it an offence to insure, or be indemnified, against monetary penalties under the Act. It was added to the model Act by the 2022 amendments, which implemented recommendation 26 of the 2018 Review of the model WHS laws. Section 272B makes officers liable when a body corporate breaches section 272A.

Why Section 272A Matters

Fines are meant to deter unsafe conduct. If a business could pass the cost of a WHS fine to an insurer, the penalty would lose much of its effect. The ban keeps the financial consequences of a conviction with the duty holder.

Core Obligations

1. Do Not Buy Penalty Cover (s272A(1)(a))

A person must not, without reasonable excuse, enter into a contract of insurance or other arrangement under which the person, or another person, is purportedly covered for all or part of a liability for a monetary penalty under the Act.

2. Do Not Provide Penalty Cover (s272A(1)(b))

A person must not, without reasonable excuse, provide insurance or a grant of indemnity for all or part of a liability for a monetary penalty under the Act. This applies to insurers and to any business that agrees to indemnify another for WHS fines, for example in a contract.

3. Do Not Take the Benefit (s272A(1)(c))

A person must not, without reasonable excuse, take the benefit of such a contract, arrangement or indemnity. Claiming on an old policy for a WHS fine can therefore be an offence.

4. Reasonable Excuse and Evidential Burden (s272A(2))

Each offence applies only where there is no reasonable excuse. The accused carries an evidential burden to show a reasonable excuse.

5. Offending Terms Are Void (s272A(3))

A term of a contract of insurance or other arrangement is void to the extent that it purports to cover a person for all or part of a liability for a monetary penalty under the Act. The model Act includes a jurisdictional note allowing transitional arrangements for existing contracts.

6. Officers Can Be Liable (s272B)

An officer of a body corporate commits an offence if the body corporate contravenes section 272A and the officer was involved in that contravention. Involvement is defined by reference to section 256(2).

7. Penalties Apply to Individuals and Bodies Corporate

Separate maximum penalties apply to individuals and to bodies corporate. In the model Act, sections 272A(1) and 272B sit in penalty tier B, which is indexed to CPI annually.

Common Compliance Approaches

Review Policies and Contracts

Check statutory liability, directors and officers, and other policies for wording that covers WHS fines. Review indemnity clauses in supply, labour hire and service contracts too.

Brief Officers

Explain to directors and managers that WHS fines cannot be insured and that officers can be personally liable under section 272B.

Get Advice on What Remains Insurable

The ban is about liability for monetary penalties. Whether other costs, such as legal defence costs, can be covered depends on policy terms and local law.

Example: Section 272A in Practice

A transport company renews its insurance program. Its broker flags that an older statutory liability policy says it covers fines and penalties under WHS laws. The company's legal team confirms that cover for WHS fines is void and that claiming on it could be an offence. The company removes that wording, keeps cover for other insured costs and briefs its board on the change.

Related regulations: WHS offences and penalty categories, WHS officer due diligence, HSE employers' liability insurance.

Note: This summary is based on the model WHS Act published by Safe Work Australia. Model amendments only apply once a jurisdiction enacts them, and some jurisdictions adopted their own insurance prohibitions with different wording or start dates. Victoria has not adopted the model WHS laws and has its own OHS Act. Always check the legislation that applies where you work.

Frequently Asked Questions

Does section 272A ban all WHS-related insurance?

No. It targets cover for liability for monetary penalties under the Act. It does not stop a business insuring other losses.

Can a head contractor make a subcontractor indemnify it for WHS fines?

Providing or taking the benefit of an indemnity for a WHS monetary penalty can be an offence without reasonable excuse, and the term is void to that extent.

Who can be prosecuted?

The person who enters into the arrangement, the person who provides it, the person who takes the benefit, and officers involved in a body corporate's contravention.