RMA Reform: Legislative changes significantly affect environmental risk landscape for contractors
For contractors operating in New Zealand, the Government’s recent changes to the Resource Management Act 1991 (RMA) signal a major shift in how environmental risk is treated in New Zealand.
The changes, which took effect from 21 August, show the government is sending an undeniable message that environmental compliance missteps will no longer receive leniency or a slap on the wrist, but will now carry real consequences.
For contractors with Statutory Liability cover, this change may impact insurance coverage so it’s vital you understand the changes.
What you need to know
The most significant change to the RMA is the size of the penalties. Maximum fines for environmental offences have surged. For individuals, the cap has jumped from $300,000 to $1 million. For companies and entities, it’s gone from $600,000 to $10 million – an increase of more than 1,500%.
But the headline is not just the increased fines, it’s that they can no longer be insured. Under the updated law, insurers are prohibited from paying RMA fines and infringement fees. This is not a choice made by your insurer; it is a directive from Parliament designed to ensure fines remain a true deterrent.
So even if you’ve long relied on Statutory Liability cover as a financial safeguard, that safety net just got a lot smaller.
And this applies immediately. Even organisations already in the middle of an RMA-related claim will find that, as of 21 August, fines are no longer insurable. Defence costs remain covered, but the fine itself is now yours to carry.
Every contractor must continue to treat RMA compliance with the same rigor and proactive prevention and risk management they apply to safety on site.
What this means for you
For many civil contractors, Statutory Liability cover has long been viewed as a critical buffer against the unpredictable nature of environmental incidents.
While losing cover for fines may seem concerning, your Statutory Liability policy still provides valuable support. Cover remains for expert legal advice and specialist defence costs (subject to your policy’s terms and conditions), which can help guide you if you are facing a prosecution.
This is still an important benefit. We’ve seen in the health and safety space, where fines have also been uninsurable for several years, that expert legal services have proven incredibly helpful. Navigating WorkSafe investigations has taught many organisations that expertise can prevent costs from spiralling and ensure better outcomes. The same applies with environmental enforcement.
A signal of what’s to come
The Government’s intent here is clear: stronger compliance and accountability is the goal. The intention behind this reform is to give penalties "real teeth" and ensure they are not simply seen as a minor, insurable "cost of doing business".
Making fines uninsurable places the financial onus squarely on organisations and individuals. In theory, it creates a sharper incentive to invest in environmental risk management and prevention.
For contractors, this should prompt a serious look at environmental processes, site supervision, staff training, and operational resilience, particularly during high-risk phases of a project.
In the coming months, contractors may see updates to their Statutory Liability policy documents, where insurers will issue endorsements (essentially, updated wording) to clarify that cover for RMA fines and infringement fees are no longer covered.