Treasury Opens Consultation on Enhancing PI Insurance to Ensure Long-Term CSLR Sustainability

Treasury has opened consultation on whether professional indemnity insurance (PII) can play a more important role in responding to compensation claims, as the federal government grapples with the sustainability the Compensation Scheme of Last Resort (CSLR).

It is seeking feedback on “opportunities to enhance the effectiveness” of PII in the CSLR context, arguing that a more robust private insurance backstop could reduce reliance on the taxpayer-adjacent redress scheme and support its long-term sustainability.

The consultation was flagged alongside the Minister for Financial Services the Hon Daniel Mulino MP announcing a $47.3 million special levy for 2025–26, to be applied broadly across consumer-facing subsectors, after increased pressure on CSLR.

At the moment, general insurance intermediaries remain outside the CSLR’s scope due to the low number of unpaid AFCA determinations involving the sector.

NIBA has consistently supported strong consumer protections and fair dispute resolution mechanisms while also advocating for policy settings that recognise the distinct role of insurance brokers.

In a submission to Treasury in August last year, NIBA argued that general insurance intermediaries were excluded “in recognition of the low number of unpaid AFCA determinations involving the sector” and highlighted that expanding the funding base to insurance sectors that have not contributed to unpaid determinations, be it directly or indirectly, would be “unjustified, disproportionate, and inconsistent” with the scheme’s purpose.

However, if CSLR sustainability remains under pressure, one can expect recurring scrutiny around who pays. NIBA notes it’s critical that circumstances around funding pressures should not become a “pretext for expanding the scheme’s reach” to other sectors that have not played a role in contributing to unpaid determinations.