National Disability Insurance Scheme (NDIS) agencies will have the power to recover payments from general insurers.

“The CEO [of a state’s NDIS agency] will be able to send a recovery notice to a compensation-payer or insurer where an NDIS amount has been paid to a person under a participant’s plan,” an explanatory memo on the scheme says.

“A compensation payer or insurer is liable to pay compensation to the participant in relation to their impairment.”

Once an insurer has paid the agency all liability will be discharged. If it ignores the payment notice courts can impose a fine of up to five times the standard penalty: up to one year in jail or 60 penalty units.

Not all states have signed up for the scheme, despite initial support from premiers. NSW recently joined Victoria in the NDIS, while Queensland and WA are still negotiating with the Federal Government.