A new insurance clause is being touted by the coal seam gas industry as a solution to uncertainty about risk and liability, but landholders and lawyers say farmers are still worse off.
- GasFields Commission Queensland releases an insurance indemnity clause to help protect farmers from CSG risk
- It follows a major insurer last year announcing it would no longer offer public liability insurance to landholders who host wells and infrastructure
- Landholders and lawyers say it still doesn’t even the playing field for farmers forced into negotiation with gas companies
Last year, Australia’s biggest insurer IAG, owner of major rural insurer WFI, announced it would no longer provide public liability insurance to landholders who hosted coal seam gas (CSG) wells and infrastructure.
This week the independent GasFields Commission Queensland (GFCQ) announced a new indemnity clause to help clarify concerns about insurance.
“What is means is that landholders who host gas activities, including infrastructure on their properties, will be able to continue to access general insurance policies for farm risk,” said the acting CEO of GFCQ, Warwick Squire.
Mr Squire said the clause could be inserted as an amendment to existing agreements between farmers and gas companies.
He said it would protect landholders from any risk of public liability exposure related to CSG activity, but would not always be required by insurers.
Toowoomba insurance broker Jason Johnston was involved in the negotiation of the new clause.
“The current indemnity clause is a good document,” Mr Johnston said.
But he said there would be additional legal fees that could fall to the landholder.
GFCQ said state laws required gas companies to cover costs to landholders relating to resource activity.
“The landholder should not be out of pocket as a result of any new negotiations associated with this clause,” Mr Squire said.
Peak industry body Australian Petroleum Production and Exploration Association said landholders should speak to their insurer if they had concerns.
“Gas companies must reimburse landholders for reasonable and necessary legal advice costs incurred in negotiating land access agreements,” said APPEA’s chief executive Andrew McConville.
Future risk from CSG still uncertain
Zena Ronnfeldt, who farms west of Dalby in southern Queensland, said the indemnity clause was only effective while gas companies were operational.
“It really doesn’t do anything to solve the liability crisis we’re now all facing when gas activity ends,” Ms Ronnfeldt said.
Ms Ronnfeldt recently proposed a national levy to ensure adequate long-term protection for farmers.
GFCQ acknowledged the concerns and said it continued to work towards a solution on long-term risk after gas development ends.
APPEA said there were a range of existing regulatory options to address future risk.
“We are working with peak farming bodies, insurers, and the Queensland government to clarify arrangements post-gas development,” APPEA’s Mr McConville said.
Dalby-based landholder lawyer and special counsel for Shine Lawyers, Peter Shannon, was more scathing of the announcement of the new indemnity.
“We don’t know which companies have agreed to what cover.
“We don’t know the circumstances in which this indemnity clause being proposed will be agreed to.”
APPEA said the clause has the support of the Insurance Council of Australia on behalf of the broader industry.
“The clause is being used by some APPEA members for new land access agreements,” Mr McConville said.
“The clause may also be applied to existing agreements if required by the insurer and agreed to by the landholder and proponent.”
Mr Shannon said landholders had “one hand behind their back”, obliged to make commercial agreements with gas companies who owned the rights to the resource under their land.
The only recourse for farmers is to take a complaint to the Land Court at their own cost.
‘In 20 years we may not have cover’
Mr Shannon also said gas companies were structured to protect their parent companies.
In order to level the playing field for farmers, Mr Shannon said there needed to be a commercial incentive.
“You have to have the same commercial interest in effect as the other party to get mutually beneficial outcomes,” he said.
“If we’re not being 100 per cent indemnified then we need to have money to give us an incentive to take the risk with that.
“The risk [is] that in 20 years we may not have cover.”