Insurers expected to face demand for extended statutory liability cover

Directors and officers will also face higher personal accountability.

Insurers are expected to face demand for extended statutory liability cover, with policy wording, premiums and exclusions likely to be adjusted to reflect the added risks, amidst Australia’s New Aged Care Act 2024, Clyde & Co. said in an insight.

“Insurers will need to carefully consider the terms of any additional coverage so as not to absorb a disproportionate number and broader scope of new claims,” the insight said.

The Act will take effect on 1 November, tightening governance standards and expanding liability for aged care providers.

The law makes providers responsible for the actions of “associated providers” such as contractors and staffing firms, broadening their exposure to claims and penalties.

The Act also allows compensation claims to be lodged directly with the Aged Care Quality and Safety Commission, raising the potential for more regulatory investigations and legal costs.

Directors and officers will also face higher personal accountability, prompting a need to review D&O, management liability and statutory liability policies ahead of the November rollout.