New changes to the Work, Health and Safety Act will now impose a heavier burden on corporate directors as WHS penalties can no longer be covered by an insurance policy. The amendments to the Act now prevent companies and their directors from using their insurance for compensation in claims of WHS violations. Previously safeguarded by their insurance, directors can now longer afford to neglect their risk management policies whilst remaining in an advantageous position.
Under the new rules, company directors will no longer be able to:
- Take out insurance to indemnify its employees or officers for WHS breaches; or
- Allow an insurer to indemnify a company or those associated with it for WHS breaches.
The changes will see Directors taking a more active role in the business of WHS increasing their financial liability, rather than being bailed out by way of traditional insurance coverage, such as Directors and Officer’s Liability insurance.
Those working in the legal field of WHS additionally have the increased responsibility of keeping lines of communication open with their clients to understand the ever-changing business environment. The new rules, if anything, demonstrate the importance of lawyers assisting clients to pay close attention to their risk management needs, in order to understand how each business operates, rather than assessing these needs based on business process and procedure trends.