Insurance alarm bells ringing for landowners with CSG infrastructure on their properties

By Michael Morris, Associate at Hillhouse Legal Partners
| 3 min. read

Key takeaways

  • The Insurance Australia Group has announced that its major rural and regional insurer, WFI, will join its other subsidiary, CGU, in no longer providing public liability coverage if there are “unconventional gas” operations on a property.
  • The Insurance Council of Australia (ICA), the Australian Petroleum Production and Exploration Association (APPEA) and other groups have engaged in discussions to secure appropriate public liability cover for affected landowners.
  • All landowners with CSG infrastructure on their properties should contact their insurer or broker to ascertain whether they will continue to be covered. Landowners engaged in negotiations with CSG companies should address the issue when negotiating the terms of their conduct and compensation agreement.

In recent months, Agforce members will have read about concerns that some insurers are no longer offering public liability insurance to landowners that have coal seam gas (CSG) infrastructure on their properties.

The issue first came to light in May 2020, when Insurance Australia Group (IAG) confirmed its major rural and regional insurer, WFI, would join its other subsidiary, CGU, in no longer providing the coverage if there are “unconventional gas” operations on a property.

In early July 2020, it was reported the Insurance Council of Australia (ICA), the Australian Petroleum Production and Exploration Association (APPEA) and other groups were continuing discussions on liability cover for landowners.

An ICA spokesman said the ICA believed contracts between CSG companies and landowners should indemnify landowners for CSG-related risks.

A Landholder Insurance Issue Working Group has also been convened by the Gasfields Commission to investigate the issue.

Ultimately, in late June 2020 Agforce announced that they had been able to assist members in sourcing alternative public liability insurance coverage, which in many instances resulted in lower premises. 

In light of these developments, we strongly recommend that all landowners with CSG infrastructure on their properties immediately contact their insurer or broker to ascertain whether they will continue to be covered. 

For those landowners currently engaged in negotiations with CSG companies, we recommend this issue be specifically addressed in when negotiating the terms of the conduct and compensation agreement.

The agreement should clearly set out that the landowner’s rights in respect of any increase in insurance premiums or unavailability of insurance, as a consequence of CSG infrastructure being situated on their property, are not compromised. 

Similarly, the agreement should also provide that the landowner’s rights in respect of any increase in Council rates, or inability to obtain a full exemption from land tax, as a consequence of CSG infrastructure being situated on the property, are not compromised. I note my previous article with respect to the potential for an increase in rates.

For those landowners with conduct and compensation agreements already in place, in the event their insurance premiums increase or they are unable to obtain insurance, they should seek legal advice immediately. The path to resolving the issue may depend on the wording of agreement with the CSG company.  

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.