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Farm coal seam gas liability worries spark talks

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The petroleum industry and agricultural groups are working with the Insurance Council of Australia (ICA) to resolve issues around liability cover for farmers hosting coal seam gas (CSG) production.

Queensland rural group AgForce this month warned that landowners with gas infrastructure on properties could struggle to obtain liability insurance after WFI said it was no longer providing the cover as part of farm policies in those circumstances.

ICA, the Australian Petroleum Production and Exploration Association (APPEA), National Farmers Federation, Queensland Farmers Federation, AgForce and Cotton Australia say they are working to ensure a common understanding of the combined effect of insurance, legislative protections and indemnities in protecting farmers who host gas activities.

“It is hoped that this position will soon be reflected in a common indemnity provision being included in all land access agreements and a common public liability position in farm insurance policies,” they say in a joint statement.

Farmers hosting natural gas activities are protected by indemnities offered by gas companies as part of land access agreements as well as by regulation and legislation, according to the statement.

Public liability insurance offered to farmers is designed and priced to cover farm risk only, and may not cover losses associated with activities such as gas production.

“The general insurance industry is working with APPEA and stakeholders to ensure land access agreements provided by CSG operators are consistent in providing indemnity that covers land owners for losses and risks related to CSG operations,” ICA spokesman Campbell Fuller told insuranceNEWS.com.au.

“Insurers will individually determine whether they are comfortable with the indemnity cover provided through the CSG company when they consider whether they will insure these landholdings for normal farm risks.”

IAG, which owns WFI, says the liability section of the policy was recently changed, bringing it in line with CGU’s approach, as the group does not specialise in underwriting resources and mining activities.

“Since then, it has become clear that farmers would benefit from greater clarity around the liability protection that is in place should they have CSG operations on their properties,” a spokesman said today.

“As part of this, we’re working with the ICA and will review any proposal around a common liability position across all impacted industries, however this work is still underway.”

The WFI change does not affect other sections of policies, such as cover for the house and farm machinery and equipment.

AgForce, which represents producers of cattle, grain, sugarcane, sheep and wool, has said previously that coal seam gas extraction is already an issue that polarises the sector.

“The general insurance, oil and gas, and agriculture industries confirm that general insurance policies for farm risk continue to remain available, through various insurers, to farmers who host natural gas activities,” the joint statement says.