Insurance policies that allow corporations and directors to be covered for workplace health and safety (WHS) breaches are “utterly reprehensible” and should be outlawed in legislation, a Senate committee report says.

But insurers have fired back, with the Insurance Council of Australia (ICA) saying any action to limit directors’ and officers’ (D&O) insurance could have far-reaching impacts on the industry.

The policies have been criticised by the Senate education and employment references committee for significantly undermining the deterrent value of penalties imposed on directors and managers.

The senators say such behaviour is “appalling”, and have demanded the issue be urgently addressed.

“Companies that take out this [D&O] insurance show an inexcusable disregard for the consequences of their actions.”

The committee recommends Safe Work Australia co-ordinate with governments to make it unlawful to insure against a fine, investigation costs or defence costs where they apply to WHS legislation breaches.

Insurance Council of Australia spokesman Campbell Fuller says the inquiry recommendation will be reviewed for its potential impact on the industry, its customers and employees.

“The recommendation, if implemented, could have wide-ranging implications for insurers across various types of insurance policies,” he told insuranceNEWS.com.au. “This is a complex area of law.”

The Senate education and employment references committee earlier this year began its inquiry into the framework surrounding the prevention, investigation and prosecution of industrial deaths.

The report makes 34 recommendations, which include introducing a nationally consistent industrial manslaughter offence into WHS laws and having all industrial deaths investigated as potential crime scenes.

University of Newcastle Associate Professor Neil Foster told inquiry hearings that insurance contracts should be void under common law if covering a criminal penalty, but they are being issued and claims paid in the case of workplace health and safety.

“It seems that we’re in a situation where the self-interest of the two parties to the contract will support the availability – at least while no-one challenges it – of these contracts,” he said.

“So, company officers would like to have insurance, [and] insurance companies would like to provide these things and receive premiums for them.”

Labor Senator and committee chairman Gavin Marshall says 97 people had been killed at work in the year to October 4.

“For those organisations that wilfully flout the existing work health and safety arrangements and whose actions result in a catastrophic outcome of loss of life, it is entirely warranted that serious consequences flow,” he said.

Safe Work Australia is separately looking into potential changes to legislation, last year appointing former SafeWork SA executive director Marie Boland to review how laws are working in practice. The report, to be completed by the end of this year, will go to WHS ministers early next year.

To see the relevant section of the Senate committee report, click here.