Australia’s largest insurer has announced that it will no longer provide coverage to farmers whose properties have CSG infrastructure on it. The decision by Insurance Australia Group to no longer provide public liability insurance to farmers whose land hosts CSG activity threatens the agricultural sector as they face the prospect of being left to either operate uninsured or close their operations entirely. The environmental risks associated with CSG operations and pipelines include, but are not limited to groundwater contamination, soil pollution, and the release of dangerous levels of methane into the atmosphere. Farmers could also face losing their industry accreditation in the event of a spill or gas infrastructure failure. Opponents to CSG argue that laws should be changed to ensure that companies share the burden of risk and compensate property owners, in addition to the royalties they receive, especially if no insurance can be made available to them, which would safeguard them from the cost of risks of CSG operations. However, the possibility of such indemnification may only apply so long as there is an active CSG operation on the property and will not account for when infrastructure is left there or the associated environmental risks with removing it.
In response, landowners and farmers have lobbied the government to impose a levy on gas companies to create a scheme to protect farmers from additional risk costs, which would have otherwise been covered by public liability insurance. It has been argued that the royalties system should be revised so that it provides greater certainty of financial protection for farmers. A call has also been made for changes to the Conduct and Compensation Agreement so that it may also mitigate risks to landholders by requiring gas companies to have insurance to cover the CSG risks posed to landholders.