C2026A00066NDIS Checker

Schedule 2, Part 2

Paying an indemnity while a notice is in force

An insurer that pays on an indemnity after being given an Agency notice contravenes a civil penalty provision, unless the notice is revoked, the amount has been paid to the Agency, or the CEO has given written permission.

What does the provision require?

Subsection 114(5) makes it a contravention for a potential compensation payer to make a compensation payment after a notice under section 109(1) or 111(1). Subsection 114(7) does the same for an insurer that has been given a notice under section 109(2) or 111(2) and makes a payment in relation to the liability to indemnify. Each carries 60 penalty units.

Subsection (6) and subsection (8) set out the only escapes. For a section 109 notice, the CEO must have revoked the notice in writing. For a section 111 notice, the payer or insurer must have paid the Agency the amount specified in the notice. In both cases the CEO may give written permission to pay the amount. A defendant bears an evidential burden on those matters, which means the insurer must be able to produce the revocation, the payment record or the permission.

Why does it matter to an insurer or a provider?

This is a hard stop on a claims workflow. A settlement authority that runs ahead of the notice check produces a contravention even where the insurer acted in good faith, and the evidential burden sits with the insurer. The control has to sit at the payment instruction, not at the file review, and the permission route has to be documented before the payment run rather than after it.

What did the amendment change?

The earlier provision created an offence for making a payment in breach of a notice. The Act adds civil penalties for the same conduct and states the exceptions in the civil penalty provision itself. The insurer limb in subsection 114(7) is new in express terms.

Suggested evidence

These are the publisher's control suggestions, not statutory requirements. The provision's own requirement is above; an auditor or regulator decides what is sufficient.

  • The notice and the claim or liability it relates to
  • The payment instruction and the date, checked against the notice date
  • The CEO's written revocation or permission, or the record of payment to the Agency
  • The claims system control that blocks payment where a notice flag is set
  • The reconciliation that shows no payment was made while the notice stood

What should be done before the date?

  1. Put a hard block on payment where a section 109 or 111 notice flag is set
  2. Name the person who may seek written permission and the evidence they keep
  3. Reconcile every notice to the payment ledger monthly
  4. Add the block to the delegated authority claims system, not only the insurer's own

What the text does not say

The text does not prescribe how a permission is sought or how long the CEO may take to answer. It does not say whether a part payment is permitted. It does not address a payment made after the notice is revoked but before the insurer learns of the revocation.

Where this sits

subsections 114(5) and 114(7), inserted by item 57 in Schedule 2, Part 2, Civil penalties and regulatory powers (item 57, with the application rule at items 74(5) and 74(6)). Read the official text at https://www.legislation.gov.au/C2026A00066/latest/text. The record was read on 21 October 2026.

Not legal advice; does not certify. This page is a reading of the provision in our own words, not a reproduction of it, and not advice on your own facts.

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