Aged care has been in the spotlight for many years in Australia, and has faced a number of challenges along the way. From the Royal Commission into Aged Care, the global pandemic and the Aged Care Taskforce, the sector has had many issues to navigate outside of the “day-to-day”.

The latest of these is the Aged Care Bill, which was introduced to Parliament in September 2024, and the resultant Aged Care Act which is expected to commence on 1 July 2025 if passed by Parliament.

The Aged Care Bill was created in response to the findings of the Aged Care Taskforce which reported that by 2050, the residential aged care sector will need $56 billion in capital funding to upgrade existing facilities and build the additional rooms older Australians will need. This is due to the forecast that over the next 40 years, the number of Australians aged over 65 will double and those aged over 85 will triple.

Here’s what you need to know – and the insurance implications that may emerge as a result.

The new Aged Care Act

The Aged Care Act will replace existing legislation including the Aged Care Act 1997 and the Aged Care Quality and Safety Commission Act 2018.

It’s described as a ‘once in a generation reform’ intended to improve the way services are delivered to older people in their homes, community settings and approved residential aged care homes.

Amongst other things, the new Act will:

● outline the rights of older people who are seeking and accessing aged care services

● create a single entry point, with clear eligibility requirements

● include a fair, culturally safe single assessment framework

● support the delivery of aged care services

● establish new system oversight and accountability arrangements

● increase provider accountability through a new regulatory model

● strengthen the aged care regulator.

A range of reforms are designed to help ensure residential aged care providers can attract the investment they need to keep current facilities open, improve quality, and build new facilities, including larger means-tested contributions, a higher maximum room price that is indexed over time and the retention of a small portion of refundable accommodation deposits by providers.

The new Aged Care Act legislation also includes:

● a Statement of Rights for older Australians in aged care, with a positive duty for providers to uphold those rights

● new duties to hold providers and people in positions of leadership accountable, along with a compensation pathway

● new Quality Standards to drive continuous improvement and high-quality care

● stronger regulatory powers to protect people from harm

● new whistleblower protections

● a regulator with stronger investigative powers

● a new, independent statutory Complaints Commissioner.

“Through the new legislation, there is certainly additional exposure for directors as there is a focus on the board.It is important that aged care businesses speak to their broker to discuss and recognise in what ways the new legislation may impact their organisation,” says Nicole Magro, Account Manager at Gow-Gates Insurance Brokers.

Expert risk advice in aged care

For the best part of five decades, Gow-Gates has been working with aged care providers to minimise risk, reduce costs and limit disruption while ensuring the organisation is protected, should an event occur.

At times of legislative change, that advice and guidance – and insurance expertise – is exceptionally important, especially given the challenges insurance in this sector is already facing.

Since the Royal Commission and also the pandemic, the sector has contended with increased costs and a reduction in coverage, with some insurers vacating the market.

We are now seeing new capacity from different markets, and by working with your Gow-Gates broker early, you can get the best outcome.

Being prepared is always smart when it comes to renewals

To enable us to deliver the very best outcomes, preparation is key.

The renewal process should start early – at least three months before the renewal date, which allows enough time to present the renewal in the best light, and gives us time to negotiate. Of course, it also gives us the time to get alternate options, too – which, if the clock is ticking, is far more difficult.

We need to demonstrate your business manages risk well – particularly with respect to safeguarding and clinical risk governance. That means having copies of your Serious Incident Response Scheme (SIRS) policies and procedures available. In relation to insurance cover concerning abuse, it’s important to be able to demonstrate your risk management procedures include a regularly reviewed abuse policy.

If you have “unmets” or sanctions, you should be able to demonstrate what you’ve done to rectify the issues. If the financials aren’t strong, it’s good to be able to share the story of what you’re doing to turn things around.

If there are matters that may lead to a claim, they need to be notified. An example of this is SIRS Priority 1 or any employment practices issues. This is particularly important if you are considering moving your policy. A new insurer will automatically exclude known circumstances and the previous insurer won’t respond to a known circumstance that wasn’t notified prior to the expiry of the policy.

Guidance you can trust

Gow-Gates is ready to help you navigate the aged care risks you face, including any new exposures that may emerge from the new Aged Care Act. For more information, contact your Gow-Gates broker or call 02 8267 9999.