Insurance sureties: an alternative solution for environmental rehabilitation securities

All Australian jurisdictions have their own laws regarding the provision of security for mine rehabilitation works. For example, New South Wales has had in place for some time, the ability for this security to be provided in the form of insurance sureties. In 2019, Queensland introduced a new regime enabling the use of insurance sureties as a form of surety.

An insurance surety is an undertaking provided by an insurance company on behalf of the bonded party (mine operator) to a beneficiary (the state) to pay the face value of the surety on presentation. It works just like a bank guarantee.

While both jurisdictions previously required that insurance surety providers be approved by the Australian Prudential Regulation Authority (APRA), recently, Queensland has approved an overseas insurer in recognition of both the change in the Australian insurance surety market, as well as the financial ability of the overseas insurer. This is a significant win for Queensland