Friday, 14 October 2022

The Insurance Council of Australia (ICA) today acknowledged the High Court’s decision to deny special leave to appeal the judgment of the Full Court of the Federal Court of Australia on the interpretation of policy wordings in business interruption policies.

The Full Court of the Federal Court delivered its judgment on 21 February 2022 where it substantially upheld the arguments of insurers in four of the five matters in the test case which were appealed.

The Full Court found that in those four matters the insurers were not liable to indemnify the policyholders.

In the other case, the Full Court upheld the earlier decision to the effect that cover had been triggered but that there were substantial issues as to whether the policyholder could prove any relevant business interruption.

The policyholder in this case is entitled to bring it back before the Federal Court for determination if it considers that it can identify any loss covered by the policy.

With the exception of the one case that might go back before the Federal Court, the High Court’s rulings on these matters draws to a close the formal test case process concerning Covid-19 related business interruption matters.

Insurance Council members, including those not directly involved in the court proceedings, have committed to applying the principles of the courts’ final rulings in the test cases consistently and efficiently to all business interruption claims.

The first business interruption test case was resolved in favour of policyholders in June 2021, with the outcome that insurers could not rely on references to the Quarantine Act “and subsequent amendments” in policies to exclude Covid-19 related claims.

The second test case has now resolved further interpretations of aspects of business interruption polices.

Claims will ultimately be determined based on the applicable principles of the final judgment in this test case and that of the first test case, as well as the wording of the particular policy of the policyholder.

Insurers have taken steps to ensure claims are prioritised and finalised as quickly as possible. Policyholders should contact their broker or insurer directly if they require clarity on their particular circumstances.

Comment attributable to Andrew Hall, CEO, Insurance Council of Australia:

Today’s decision by the High Court marks a significant milestone in a process that at its heart has been about understanding the extent to which business interruption insurance provides cover under the unprecedented conditions we experienced over the last two and a half years.

This has not been an easy or straightforward process, and insurers and the Insurance Council want to thank the policyholders who agreed to be part of both test cases for their patience and community spirit.

We recognise this has been a particularly difficult time for many small businesses and we sought the courts’ determinations and funded these test cases in order to establish the principles necessary in order to minimise disputes.

Insurers are pleased that, coupled with the ruling in the first test case, today’s determination provides guidance to the industry and policyholders, to help facilitate fair and consistent determinations on claims.

Insurers and brokers will be communicating directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.

Thursday, 4 August 2022

The Insurance Council of Australia (ICA) today acknowledged the High Court’s request to hear oral arguments on the applications for special leave to appeal the Full Court of the Federal Court of Australia’s recent judgment on the interpretation of policy wordings in business interruption policies in the context of COVID-19.

The High Court today indicated that the oral hearing will not be listed before October 2022 at the earliest.

The Full Court of the Federal Court delivered its judgment on 21 February 2022 where it substantially upheld the arguments of insurers in four of the five matters in the test case which were appealed. The Full Court found that in those four matters the insurers were not liable to indemnify the policyholders.

Applications for special leave to appeal to the High Court were filed by two policyholders in March 2022, and an application was also filed by the insurer IAG in respect of the issue of whether JobKeeper payments should be taken into account when calculating any insurance payment.

The industry will meet the costs of the policyholders in these special leave applications and any resulting appeals as agreed as part of the decision to obtain an outcome through test cases.

Comment attributable to Andrew Hall, CEO, Insurance Council of Australia:

The Insurance Council and insurers acknowledge the High Court’s request to hear oral arguments on the applications for special leave to appeal parts of the judgment of the Full Court of the Federal Court of Australia.

We recognise this has been a particularly difficult time for many small businesses and we sought the courts’ determinations to establish the principles necessary to minimise disputes.

Tuesday, 22 March 2022

The Insurance Council of Australia (ICA) notes that applications for special leave to the High Court of Australia have been filed by two policyholders and one insurer to appeal parts of the recent judgment of the Full Court of the Federal Court of Australia in the second business interruption insurance test case.

The judgment delivered by the Full Court of the Federal Court of Australia on 21 February 2022 substantially upheld the arguments of insurers, finding that in most instances the insurers are not liable to indemnify the policyholders.

Two policyholders, The Taphouse Townsville Pty Ltd and LCA Marrickville Pty Ltd, have each filed applications for special leave to appeal to the High Court. Taphouse Townsville's appeal deals with whether cover is available under the 'prevention of access clause' or the 'hybrid clause' in its policy.  LCA Marrickville's appeal deals with whether cover is available under the 'prevention of access clause' or the 'catastrophe clause' in its policy.  Both the trial judge and the Full Court found in favour of the insurers on these issues, holding that the policyholders were not entitled to cover under any of these insuring clauses. 

The appeal filed by the insurer, IAG, is confined to the issue of whether JobKeeper payments are to be taken into account when calculating the amount of the insurance payment (if any) to the policyholder.  Although the trial judge held that JobKeeper payments should be taken into account, the Full Court took a different view. This is an important issue for policyholders and insurers throughout the industry given the number of businesses that participated in the JobKeeper program. The ICA supports IAG’s application for leave to appeal. 

The option for these appeals by either the policyholders or insurers was agreed to as part of the original decision to seek an outcome from the courts through test cases. The insurance industry will continue to meet the costs of the policyholders in the appeal process.

Comment attributable to Andrew Hall, CEO, ICA:

While we understand there is frustration that the matter continues through the courts, we recognise the need for both policyholders and insurers to obtain definitive guidance from the courts as to how relevant business interruption policy wordings are to be interpreted and applied. 

Monday, 21 February 2022

The Insurance Council of Australia (ICA) acknowledges today’s judgment of the Full Court of the Federal Court of Australia in the appeals in the second business interruption test case. Appeals were filed in respect of five of the ten test case matters.

The ruling substantially upheld the earlier Federal Court judgment delivered in October 2021. The Full Court also upheld a ruling that insurers could not rely on a section of Victorian property legislation to exclude liability.

The judgment provides further clarity on key issues in respect of the wordings in business interruption policies such as disease definition, COVID-19 outbreak proximity, the impact of government mandates and other policy wording matters.

The parties to the Full Court proceedings have a period of 28 days in which they may apply for special leave to appeal to the High Court.

Insurance Council members, including those not directly involved in the court proceedings, have committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims.

Claims will ultimately be determined based on the applicable principles of the final judgment in this test case, and that of the first test case, as well as the wording of the particular policy of the policyholder.

Comment attributable to Andrew Hall, CEO, Insurance Council of Australia:

We welcome today’s Full Court judgment which marks another important step in seeking clarity for business policyholders and the general insurance sector.

These matters are not clear cut and we acknowledge that this has been a long but necessary process that will ultimately provide important guidance on how business interruption policy wordings are to be interpreted and applied.

We hope that the matter can be brought to a close as soon as possible.

Friday, 12 November 2021

The Insurance Council of Australia notes the Full Court of Federal Court of Australia has today concluded hearing appeals in the second business interruption insurance test case.

The Court has reserved its judgment, which is anticipated by the end of the year or shortly thereafter.

Appeals were brought by both policyholders and insurers on a number of issues arising from the judgment delivered by Justice Jagot of the Federal Court of Australia on 8 October 2021. 

Policyholders filed appeals to the Full Court of the Federal Court on five of the test case matters and insurers filed cross-appeals and notices of contention in relation to those five matters. 

Five other matters in the test case involving insurers Chubb, Allianz and Guild were not appealed. 

Comment attributable to Andrew Hall, CEO Insurance Council of Australia:

This is an important step towards finalising this matter and we are grateful to the Court for expediting the process so a determination can be reached as soon as possible.

Insurers, including those not directly involved in the court proceedings, are committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims.