By: Chris Spain and Ashlee Sherman, along with Angela San Diego and Katya Lando from Aon.
Australia’s aged care sector is undergoing a seismic shift. The Aged Care Act 2024 (Cth) is set to commence on 1 November 2025, introducing a rights-based framework that redefines how aged care services are delivered, regulated, and funded. For organisations, particularly registered providers and associated providers, technology platforms, and service contractors, this reform presents both challenges and opportunities.
Why the reform matters
The new legislation responds to the findings of the Royal Commission into Aged Care Quality and Safety, which exposed systemic neglect, fragmentation, and underfunding in the aged care sector. The reforms to the Act aim to restore dignity and safety to aged care by placing older people’s rights at the center of service delivery. Beyond its social mission, the Act introduces new legal duties, funding models, and operational standards that carry significant commercial, risk, and insurance implications.
Key changes and impacts
The key intentions of the reforms are to establish a clear cohort of people who are eligible for aged care, to stop aged care becoming a ‘system of last resort’ and to ensure that people who should not be eligible for aged care are not receiving services. In this regard, the new act establishes a minimum eligibility age of 65 for access to aged care services (Age 50 for Aboriginal and Torres Strait Islander people). As a result, aged care providers will now serve a more clearly defined demographic, enabling more accurate risk profiling and streamlined service planning.
In light of the Royal Commission’s emphasis on aged care recipients becoming the centre of reform, the Act sees a shift toward home-based care, affirming that individuals should be supported to remain in their own homes wherever possible. While this approach promotes autonomy and dignity, it also introduces new operational challenges. Providers must now manage increased exposure to risks in unsupervised environments, necessitating stronger contractor oversight and tailored insurance solutions to address the complexities of delivering care across diverse home settings.
Legal duties and liability: Who’s accountable?
The reforms introduce a new legal framework that significantly elevates the accountability of registered providers and associated providers. One of the most immediate operational impacts is the enforceable requirement for 24/7 onsite nursing care in residential settings. While this aims to improve clinical standards, it presents substantial staffing challenges, particularly for overnight shifts, and is likely to attract increased regulatory scrutiny. Insurers may also reassess coverage terms in light of heightened compliance expectations, though at this time insurers are taking a ‘watch and wait’ approach and will monitor enforcement activity by the Aged Care Quality and Safety Commission before revising policy terms.
Beyond operational standards, the reforms establish a non-delegable statutory duty of care for registered providers, requiring them to avoid causing adverse health outcomes to individuals in their care. This duty is distinct from traditional common law obligations and introduces a unique liability framework that providers must now navigate. Adding to this complexity is the introduction of dual compensation pathways, allowing the Federal Courts to award damages for serious injury or illness caused by a breach of duty – on top of any common law personal injury claims. This development may make aged care litigation more financially viable for plaintiffs, increasing exposure for providers.
Digital platforms are also drawn into the regulatory net. Entities that promote aged care services online must now verify that listed providers are registered and not subject to banning orders. The digital platforms must also ensure that all information they advertise on their platforms is accurate. This shifts responsibility to the platform operators, who can no longer claim neutrality in the accuracy of posted content.
Finally, the reforms introduce a Statement of Rights for individuals receiving aged care services which replaces the previous charter of rights. This further picks up on the themes of the Royal Commission being an emphasis on the rights of people receiving aged care services. While breaches of these rights are not compensable, they are enforceable through complaints to the Aged Care Quality and Safety Commission, creating a new avenue for disciplinary action (including penalties) and reputational risk.
Expanded regulatory powers and implications on providers
From 1 November 2025, the Aged Care Quality and Safety Commission will gain expanded regulatory powers under the new Aged Care Act 2024. These include the ability to issue banning orders against current and former registered providers and associated providers, workers, and responsible persons who breach their obligations or pose a risk to care quality. The Commission will also be empowered to enter and search residential aged care facilities without a warrant or consent, significantly increasing its capacity to respond to serious incidents and enforce compliance. These changes reflect a broader shift toward a more proactive and risk-based regulatory model focused on safeguarding the rights and wellbeing of older Australians.
For registered providers and their insurers, these reforms signal a period of heightened scrutiny and potential increased risk exposure. Registered providers will need to implement robust screening and compliance processes to avoid engaging banned parties as failure to do so could jeopardise insurance coverage and/or trigger policy exclusions. As the Commission prepares to actively exercise its new powers, aged care organisations should review governance frameworks, update risk management protocols, and seek legal and insurance advice to ensure readiness for the post-transition regulatory environment.
What does this mean for directors and officers?
The reforms introduce a new era of accountability for senior leaders in the aged care sector. Under the legislation, individuals defined as “responsible persons” – typically directors and officers with executive authority – are subject to a statutory duty to exercise due diligence in ensuring their organisation does not cause harm to those receiving care. This duty is non-delegable and applies regardless of whether the provider itself is found liable, significantly raising the stakes for those in leadership roles.
One of the most notable changes is the introduction of personal liability for serious breaches. Responsible persons may face civil penalties capped at up to 500 penalty (At time of writing this equates to $165,000) if their conduct results in death or serious injury. The Aged Care Quality and Safety Commissioner is empowered to investigate, issue banning orders, and initiate proceedings against individuals, not just organisations. This expanded enforcement capability underscores the importance of strong governance and ethical leadership.
In addition, directors must uphold whistleblower protections, with breaches potentially resulting in compensation orders and further regulatory action. These developments heighten the risk profile for directors and officers, making Directors & Officers (D&O) insurance coverage more critical than ever. Policies should be reviewed and potentially updated to ensure they cover civil penalties, investigation costs, whistleblower-related claims, and disciplinary proceedings. Additionally, any Professional Services exclusions present in D&O insurance policies should carry a coverage write-back for a failure to supervise.
The Royal Commission made clear that poor leadership and governance directly impact care quality. Boards and executive teams must now demonstrate a balanced focus on financial performance and care standards, embedding accountability and transparency throughout their organisations. For directors and officers, this means not only understanding the new legal landscape but actively shaping a culture of compliance, safety, and respect.
What should aged care providers do now to prepare?
In light of the sweeping reforms introduced, organisations operating in or adjacent to the aged care sector must take proactive steps to ensure compliance and resilience:
First, it is essential to review existing insurance coverage, particularly Directors & Officers (D&O) or Management Liability insurance, Medical Malpractice (Professional Indemnity) and General Liability insurance, to ensure they are tailored to provide indemnity for the new statutory duties, personal liability risks, and expanded service environments. Organisations (especially registered providers) who do not currently purchase Statutory Liability insurance should seriously consider adding this class of insurance to their repertoire, given the expanded enforcement powers of the Aged Care Quality and Safety Commission. Organisations should also review the adequacy of their Limit of Liability, noting the introduction of new compensation pathways which will operate alongside existing compensation pathways under common law and statute.
Second, organisations should update governance frameworksto clearly define roles and responsibilities – especially for those deemed “responsible persons” under the reforms – ensuring accountability is embedded at every level.
Third, risk management protocols must be strengthened, with a focus on integrating compliance into daily operations to prepare for increased regulatory scrutiny and potential litigation.
Finally, organisations should engage legal and strategic advisors to navigate the complexities of the new legal ecosystem, interpret emerging duties, manage claims, and structure contracts that align with the evolving regulatory landscape.
The Aged Care Act 2024 is more than a legislative update – it’s a transformation of how Australia cares for its ageing population. For organisations, it demands a proactive, strategic response to ensure compliance, manage risk, and continue delivering safe, high-quality care. For directors and officers, it introduces a new era of accountability – one that must be met with diligence, transparency, and leadership.
Connect with Wotton Kearney
We hope you found this update useful. This article has been jointly prepared by Wotton Kearney and Aon.
If you’d like to discuss how these reforms could affect you, or understand how Wotton Kearney can support your organisation in navigating the changes, please get in touch with our authors.