In most countries, if you are fined for breaching an environmental regulation, your insurance policy might soften the blow. In New Zealand, that safety net was removed on 20 August 2025. Among other changes, the Resource Management (Consenting and Other System Changes) Amendment Act 2025 makes it unlawful to insure against fines for breaches of the RMA. The prohibition extends to purchasing, offering, or indemnifying another person’s liability for RMA fines or infringement fees. This means that any penalty imposed must be borne directly by the company or individual. However, legal expenses cover remains available. This marks a seismic shift for insureds and insurers in how environmental liability is managed and insured in New Zealand. 

What are the changes and why are they important?

As of August 2025, it became unlawful for insurers or others to indemnify insureds for liability for fines under the RMA. Given the need for time to revise policy wordings, insurers have the next two years to remove clauses which indemnify for RMA fines. Failure to do so will itself be penalised from August 2027. This article will illuminate some of the subtle ripple effects brought by section 342A, to help insurers pre-empt these problems. 

The courts have already begun to enforce the new provisions. With risk profiles shifting overnight, particularly in high-exposure sectors, insurers face pressure to adjust premiums, clarify cover for defence and remediation costs, and proactively manage client expectations to avoid disputed claims, litigation or COFI risk and reputational damage. 

To the extent that a stray policy entitlement currently exists in a policy, insurers need to have processes in place to make sure insureds are not indemnified. 

Furthermore, premiums which previously reflected wider coverage may require a mid-term adjustment to reflect the fact that the insured risk has changed. Insurers will need to revise their policies and clearly distinguish the cover for defence costs and remediation, while highlighting that fines are no longer covered. Brokers will need to undertake the same exercise for their base policy wordings.

Risk profiles for certain sectors have changed overnight. Underwriters will need to reassess exposure and pricing models for clients with high RMA risk, such as those involved in agriculture, construction and forestry. While at first glance, this seems to exclude such insureds from the scope of policies, the demand for defence and remediation cover will need to be matched in supply. We expect to see sentences shift to a bias towards greater remediation costs orders, as was seen with the flight to reparation orders in the health and safety context.

If insurers fail to update clients on the consequences of the amendment on existing policies and continue to charge premiums without providing the extent of cover initially agreed, they could be exposed to financial and reputational consequences under COFI.  

This sweeping change also presents an opportunity to lead the market. Redrafting policies to emphasise defence and remediation cover will ensure clients are supported in a new risk environment and ensure clients are informed of what is not covered. Expanding and clarifying this cover will ensure insurers remain competitive, relevant, and provide certainty in a changing landscape. If insurers act quickly, they can position themselves as leaders in environmental risk management. 

A closer look 

This change mirrors existing prohibitions under the Health and Safety at Work Act 2015 (HSWA) and the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

Penalties for environmental offences have significantly increased, while at the same time maximum imprisonment terms have decreased:

• Individuals: maximum fines rise from $300,000 to $1 million.

• Companies and entities: maximum fines rise from $600,000 to $10 million.

• The maximum imprisonment term for individuals has decreased from two years to 18 months, meaning all prosecutions will now be heard by a judge alone.

Any attempt to insure or indemnify RMA fines is now a punishable offence under the amended legislation, attracting fines of up to $50,000 for individuals and $250,000 for companies or other entities. 

These changes position RMA offences among the most heavily penalised regulatory breaches in New Zealand.

Key dates

• 20 August 2025: Increased fines and the ban on insuring against fines took effect. 
  Any fine imposed after 20 August 2025 is uninsurable, and any policy clause indemnifying against such fines is now unenforceable. 
  However, increased fines will not apply to charges laid before 20 August 2025, since those proceedings fall under the previous offence provisions of the RMA. 

• 20 August 2027: The criminalising provisions take effect. 

Importantly, defence costs (including expert costs), as well as remediation costs ordered by the Court are still insurable and will remain so. They will be crucial to manage financial exposure, as experience from the health and safety sector shows. As penalties increase, we expect to see more defended prosecutions under the RMA.

Why fines are no longer insurable: a shift toward accountability

The RMA reform eliminates any ambiguity: fines for environmental breaches are now personal liabilities, not insurable costs. This is designed to preserve the deterrent effect of penalties, ensuring that they are not treated as a cost of doing business. 

By aligning with other regulatory regimes like the HSWA and CCCFA, the change reinforces a broader policy shift; environmental harm is no longer a low-tier offence. For insurers, this means adapting to a landscape where prevention and accountability are front-loaded, and where clear policy boundaries are essential to avoid disputes and uphold compliance.

Critiques of a crackdown

Insureds are now personally liable to pay higher penalties for breaches, including those arising by accident or circumstances beyond their control. As recently discussed on Radio New Zealand, a farmer spraying weeds might for instance rely on expert advice that no protected indigenous biodiversity is present. In such cases, penalising unintentional offenders does little to improve deterrence. For sectors such as farming, forestry and construction, reputational considerations and community accountability already serve to incentivise responsible practice. 

Increased penalties and personal liability may also have disproportionate effects. Māori communities have historically been more affected by the criminal justice system, and harsher RMA penalties risk compounding these inequities. Without culturally informed enforcement practices or adequate support for iwi and hapū landowners navigating the resource management system, such measures could unintentionally deepen existing disparities.

However, removing the insurance safety net may leave individuals and small businesses exposed to significant compliance costs and financial risk, particularly when facing large penalties. Given current economic pressures, this change may further strain small businesses already operating within tight margins. In many cases, the inability to pay could ultimately shift costs back onto the public.

New Zealand appears to be the only Commonwealth country taking this stance in the environmental space. Several Australian states have taken a similar approach, though mainly in health and safety legislation. Across Australia, whether fines or penalties are insurable remains uncertain and is generally decided on a case-by-case basis. In Canada, cover for environmental breaches may still be available where the offence is strict liability.

The position in the UK is also complex. Unless a regulator has expressly prohibited insurance for fines, the key question is whether those fines are “insurable by law.” While regulators have raised concerns about environmental breaches, environmental insurance remains widely available in the market (though cover may be limited for statutory debts or enforcement orders). 

Our view 

For insurers, the first priority is to remove any policy clauses providing cover for fines from current policies and ensure staff are trained to handle claims that relate to the RMA amendments. As risk profiles shift, particularly in sectors like agriculture, construction, and forestry, insurers must also reassess underwriting models, adjust premiums, and clearly define the scope of cover. 

Brokers will need to ensure that they clarify what is covered and what is not, to avoid claims which may result in confusion or disputes, particularly in borderline cases. Beyond the financial loss of disputed claims, delays in updating policies risk reputational damage. Insurers and brokers will need to educate their clients and the market proactively to manage expectations. 

While insuring against fines is now off the table, statutory defences for strict liability offences also remain available, meaning expert evidence on due diligence and financial capacity (often provided by accountants) will play a key role. Insurers that act quickly to clarify policy wordings, educate brokers and insureds, and expand support for defence, expert and remediation costs will be best placed to lead in this new regulatory environment. Whether other jurisdictions will follow New Zealand’s lead remains to be seen.  

This article was co-authored by Leticia Alvarez, a Solicitor from our Litigation team.