A Safe Work Australia independent review will likely include recommendations on insurance covering workplace health and safety (WHS) breaches, with a Senate committee report this month fuelling debate on whether it should be banned.

Former SafeWork SA Executive Director Marie Boland will complete the independent review this year, after being appointed to the task last November. The report will go to WHS ministers early next year.

The review has created considerable concern within the insurance industry, with a senior lawyer warning today that the narrowing of directors’ and officers’ or management liability insurance terms could see qualified people declining to become directors.

Ms Boland has already released a summary of her consultations, but will also consider the Senate committee report, which recommends Safe Work Australia liaise with governments to make it unlawful to insure for fines, investigation costs or defence costs related to WHS breaches.

“The committee has made 34 recommendations and Ms Boland will consider relevant recommendations that fall within the terms of reference for her review,” a Safe Work Australia spokeswoman told insuranceNEWS.com.au.

Cover provided by insurers does not extend to criminal conduct that involves intention or recklessness on the part of directors or managers.

But there has been debate over whether cover should be provided at all in lesser cases of strict liability or a lack of due diligence, even if it is considered criminal under legislation.

“That is really where the industry debate is centred – whether the mere fact that it is criminal, even if it doesn’t have that additional element of intention, is sufficient to disentitle the director to indemnity,” Meridian Lawyers Principal Andrew Sharpe told insuranceNEWS.com.au.

“This [Senate committee] report… goes even further and seems to be suggesting that the mere fact a penalty is imposed, whether civil or criminal, ought to be enough to prohibit indemnification.”

Mr Sharpe says there is a danger that highly qualified people could be deterred from taking directorships if they cannot gain cover and are held personally liable.

“There needs to be more public policy discussion around where the line should be drawn if the legislation is to create a prohibition on indemnification,” he said.

“Ultimately, the last thing consumers need is legislation that discourages the most qualified directors from accepting roles in companies undertaking high-risk activities.”

Insurance Council of Australia spokesman Campbell Fuller says the Senate committee recommendation, if implemented, could have wide-ranging implications across various types of policy. “This is a complex area of law,” he said.

The Senate committee says the policies undermine the deterrence value of penalties, and companies that take out the cover “show an inexcusable disregard for the consequences of their actions”.