Insurance coverage pass through event – guidance note

Category: 
Compliance procedures & guidelines
Status: 
Date initiated: 
28 August 2020
Effective date: 
30 July 2021
Contact: 
AER General Inquiries AERInquiry@aer.gov.au
AER reference: 
AER201074

Overview

On 30 July 2021, the AER released its final guidance note on the insurance coverage pass through event. This final guidance note sets out our expectations about the types of information that should be kept by a Network Service Provider (NSP), and the related processes that should be adopted by the NSP, to facilitate our assessment of a cost pass through application for an insurance coverage event. The insurance coverage pass through event covers general insurance liability risks that an NSP faces, including bushfire risks.

The information proposed in this final guidance note is informed by feedback from stakeholders in response to our consultation paper and draft guidance note.

This guidance applies to both electricity and gas, distribution and transmission NSPs. The guidance note provides NSPs with greater clarity on the principles we will use, and the evidence we will require, to guide and inform our decision making when assessing an insurance coverage pass through event application. The guidance note may be revised over time, in light of subsequent experience.

The guidance note outlines six information areas that we view as relevant when whether a NSP has exhausted all reasonable commercial avenues, chosen the most efficient option based on its individual operating environment, and strived to achieve the best allocation of risk with its end users.