A ‘sting’ In The Tail: Courts Close In On Insurance Cover For Civil Penalties

A recent judgment against the CEO of oil and gas supplier Qteq for cartel conduct becomes the latest example of regulators seeking to prevent directors and officers from turning to their insurance to pay their civil penalty, and the Federal Court’s willingness to do so. 

On 26 March 2026, the Federal Court ordered that a $1m penalty be paid by the CEO of oil and gas supplier Qteq for cartel conduct prevented the CEO from seeking indemnity under an insurance policy to pay the penalty.   

Record penalty – but no insurance backstop

The $1 million penalty awarded against Qteq’s CEO, Simon Ashton, was the highest for a breach by an individual in Australia of the Competition and Consumer Act 2010 (Cth) (CCA). In determining the appropriate level of the penalty imposed on Mr Ashton, Justice Bromwich considered his strong financial position to be a factor that meant that a substantial financial penalty was necessary to achieve both specific deterrence, and also general deterrence to other businessmen in his position.  
 
The penalty was imposed pursuant to section 76(1)(b) and (d) of the CCA for breaching the cartel provisions in Chapter 3 of the Act.  Mr Ashton was found to have attempted to induce competitors (or likely competitors) to enter five contracts, arrangements or understandings containing cartel provisions.

The ACCC sought a non-indemnification order precluding Mr Ashton from relying on a management liability insurance policy, which could include cover for any pecuniary penalty imposed on Mr Ashton, to pay the penalty.  Justice Bromwich was satisfied that it was appropriate that a non-indemnification order be made, on the basis that it would undermine both “specific and general deterrence”. Justice Bromwich stated that “[t]he penalties imposed on Mr Ashton would have no real deterrent effect if he did not have to pay them himself. That would in one fell swoop undermine both specific and general deterrence” and specifically ordered that Mr Ashton “is not to pursue any claim or accept any indemnity under any applicable insurance policy” to pay any part of the penalty.

Rising focus on how insurance undermines deterrence

Specific and general deterrence are the cornerstones of determining appropriate civil penalties. A penalty “must put a price on contravention that is sufficiently high to deter repetition by the contravener and by others who might be tempted to contravene.”  

The decision in Qteq is the latest example of regulators inquiring about, and seeking to exclude, insurance cover for civil penalties imposed by the Court.

In the 2025 decision in Bluescope v ACCC, the Full Federal Court upheld a decision to impose an indemnity order on Bluescope’s General Manager of Sales and Marketing to prevent him from claiming or accepting indemnification under an insurance policy for the $575,000 penalty imposed upon him for cartel conduct.   In upholding the indemnity order in Bluescope, the Full Court adopted the High Court’s reasoning in ABCC v CFMEU regarding non-indemnification orders for civil penalties, with the Full Court emphasising that “[t]he pecuniary penalty order would undoubtedly be denuded of any sting or burden if Mr Ellis was able to claim or accept indemnification pursuant to an insurance policy”.

Key takeaways 

• Regulators increasingly inquiring about insurance coverage in seeking penalties

Historically, regulators have not routinely sought non-indemnification orders. For example, $145m of the $700m civil penalty agreed between the Australian Transactions and Report Centre and CBA, where no non-indemnification order sought, was recovered under CBA’s professional indemnity policy. This equated to approximately 20% of the penalty imposed on CBA.  

Regulators are now increasingly asking entities and individuals whether they have the benefit of insurance and whether cover has been confirmed when determining: (1) the level of the civil fine or penalty; and (2) whether to seek non indemnification orders. The decision in Qteq demonstrates that this question is also a key consideration for the courts when determining the quantum of penalty required to achieve specific and general deterrence. It also demonstrates the Federal Court’s willingness to act and make non-indemnification orders where the indemnification of a penalty would undermine its deterrent effect, leaving it for the individual (or the entity) in question to pay the fine or penalty.

This decision was made against the backdrop of the question of the insurability of fines and penalties, which is unsettled in Australia. This issue can be a contentious issue for insurers and insureds, particularly where there is an argument that the fine or penalty is uninsurable on public policy grounds.

• ACCC continues to focus on cartel conduct

Cartel conduct is one of the ACCC’s ‘enduring priorities’ for enforcement .  The ACCC is currently pursuing proceedings relating to alleged cartel conduct against business across a range of sectors, including the cleaning services giant Spotless and competitor Ventia, major mobile crane hire companies and fresh vegetable suppliers. Other ACCC investigations are ongoing.

The ACCC’s enforcement armoury has been bolstered by an increased penalties for entities for competition and consumer law breaches. From 28 March 2026, the maximum penalties for civil contraventions of cartel principles is:

• $100,000,000;
• 3 times the value of the benefit obtained; or
• 30% of the corporation's adjusted turnover during the breach turnover period.

Given this context, Qtec is unlikely to be the last significant civil penalty proceedings where ACCC seeks a non-indemnification order.

Originally published 11/06/2026.

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