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ARTICLE · 13 SEPTEMBER 2013

Indemnifying against WHS penalties: The Ferro Con case

Holding Redlich
Holding Redlich
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Insurance companies are willing to indemnify individuals and companies for criminal penalties under the model WHS Act.

AustraliaInsurance
Matthew Orr
Matthew Orr
Michael Selinger
Michael Selinger
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Can you indemnify against WHS penalties?

It is widely accepted that insurance policies that purport to indemnify against criminal penalties are void against public policy. However, in an era where we are witnessing increased scrutiny of company officers and harsher penalties for white collar crimes, it is little wonder that there has been a steady increase in insurers offering, and organisations and individuals taking up, such policies. Unsurprisingly, this trend has flowed into the WHS arena where, under the new model WHS Act, companies can face penalties of up to $3 million for the most serious offences, while individuals are staring at penalties of up to $600,000 (not to mention up to 5 years jail), whether in their capacity as PCBUs or officers. And unless the legislature takes steps to prohibit such arrangements, there is no reason to think that insurers will stop offering to provide indemnity for a premium.

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