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Treasury Initiates Review of Professional Indemnity Insurance to Support CSLR

Government Seeks Feedback on Enhancing Insurance Effectiveness for Consumer Compensation

Treasury Initiates Review of Professional Indemnity Insurance to Support CSLR?w=400

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The Australian Treasury has commenced a consultation process aimed at improving the effectiveness of professional indemnity (PI) insurance, with the goal of strengthening the Compensation Scheme of Last Resort (CSLR).
This initiative seeks to gather stakeholder feedback on the current operation of PI insurance and explore opportunities for enhancement.

The CSLR was established to ensure that consumers who have suffered losses due to misconduct have access to compensation when other avenues have failed. Since its inception in April 2024, the scheme has facilitated payments of up to $150,000 to eligible consumers with unpaid determinations from the Australian Financial Complaints Authority (AFCA).

However, the sustainability of the CSLR has come under scrutiny, particularly concerning the reliance on special levies to fund compensation claims. In response, the Treasury is exploring ways to create a more robust 'first line of defence' through effective PI insurance coverage, thereby reducing the burden on the CSLR.

The consultation paper invites stakeholders to provide insights into the current PI insurance landscape, including supply, quality, pricing, and any related regulatory or business costs for licensees. The aim is to identify reform options that support the ongoing sustainability of the CSLR while ensuring that PI insurance effectively responds to compensation claims.

Submissions are open until 13 February 2026, with further consultations planned to develop comprehensive reform options. This proactive approach underscores the government's commitment to protecting consumers and maintaining confidence in the financial system's dispute resolution framework.

Published:Monday, 9th Feb 2026
Author: Paige Estritori

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