Monday, 6 September 2021

The Insurance Council of Australia (ICA) welcomes the commencement today of the second business interruption test case hearing before the Federal Court of Australia.

The hearing brings insurers and policyholders a significant step closer to having clarity and certainty on a number of key issues relating to pandemic coverage in business interruption policies.

The second test case, which is scheduled to run until 15 September, will determine the meaning of policy wordings around disease definition, Covid-19 outbreak proximity, the impact of government mandates, and other policy wording matters.

It consists of nine small business claims from a range of business sectors and locations lodged with Australian Financial Complaints Authority as part of its dispute resolution process.

At the same time, the Federal Court will hear a separate case brought by QBE regarding the interpretation of Victorian property legislation which has the potential to impact business interruption policies written under Victorian law.

Insurers represented in the second test case are Allianz, IAG, Chubb, Guild, and Swiss Re International SE, however all Insurance Council members have committed to applying the rulings of the courts in this and the first business interruption test case in a consistent way when assessing business interruption claims.

The industry will meet the costs of policyholders in the second test case, as it did in the first test case.

A live video stream of the hearing is available here.

Comment attributable to ICA CEO Andrew Hall:

The commencement of the second business interruption test case hearing is an important step towards finalising this issue and providing an efficient, transparent, and consistent framework to process business interruption claims.

Insurers acknowledge the frustrations of policyholders who have been waiting to have claims resolved, however the unprecedented nature of this pandemic has meant court determinations have been necessary to establish the principles insurers need to process claims and resolve disputes.

Insurers have taken a number of steps to ensure these claims will be prioritised when final rulings are made.

If policyholders believe they have a claim against their business interruption cover they are encouraged to contact their insurer or broker who will provide them with the information they need to lodge.

Tuesday, 24 August 2021

The Insurance Council of Australia notes the Federal Court of Australia has today ordered the second business interruption test case hearing will commence one week later than previously scheduled.

The order to vacate the 30 August 2021 hearing and reschedule to 6 September 2021 – 15 September 2021 was made in light of the difficulties that some policyholders have had in obtaining verified government data and expert evidence concerning the location and prevalence of COVID-19 outbreaks.

Insurers look forward to the second test case taking place as soon as possible and have worked hard to ensure readiness for the hearing.

It is not anticipated that this postponement will impact on the timeframe for any appeal, which has been scheduled to be heard by the Full Court of the Federal Court in November 2021.

The insurance industry’s intention throughout both test cases has been to maximise the certainty to be provided on business interruption policy matters for the benefit of the industry and policyholders alike.

At today’s hearing the court agreed with the proposal of the insurers and policyholders that the 6 September 2021 hearing proceed on the basis of the available evidence. However, the policyholders participating in the second test case will have the ability to present certain additional factual and expert evidence relevant to their claims if it later becomes available.

The second test case consists of nine small business claims from a range of business sectors and locations, lodged with the Australian Financial Complaints Authority as part of its dispute resolution process.

The court’s determinations in this and the first test case will provide clarity and guidance for all insurers and policyholders, not just those involved in the test cases.

For more information please visit insurancecouncil.com.au/bi-test-cases. 

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

Insurers acknowledge that this extra week gives policy holders more time to obtain verified State Government data and expert evidence for their cases while allowing the hearing to proceed on the basis of the available evidence.

We thank policyholders involved in this second test case for their time and patience in this important test case process.

Insurance Council members are committed to applying the courts’ rulings in both this and the first test case in an efficient, transparent, and consistent way when determining business interruption claims.

We encourage all business interruption policyholders who believe they may have a claim and have not already done so, to lodge a claim and gather and keep all necessary documents in support of it.

Saturday, 26 June 2021

The Insurance Council of Australia (ICA) today urged small businesses to submit a claim against their business interruption (BI) cover through their broker or insurer if they believe their policy responds. 

This call follows the High Court’s decision yesterday not to allow an application to appeal the judgment of the NSW Court of Appeal in the first BI test case.

The Court of Appeal’s November 2020 judgment found that references in insurance policies to a now-superseded Act of Parliament did not allow insurers to deny BI claims made because of the COVID-19 pandemic. Finalisation of many claims may still not take place until further clarity is provided by a second test case, underway now in the Federal Court.

This second text case will determine the meaning of policy wordings around disease definition, COVID outbreak proximity, the impact of government mandates, and other policy wording matters.

However this does not prevent policy holders from lodging a claim now.

Some class action law firms have claimed yesterday’s decision only has implications for customers of the two insurers involved in the first test case, Hollard and HDI, and that customers of other insurers will have to pursue their own legal remedies.

However Insurance Council members have previously committed to applying the rulings of the courts in the BI test cases in a consistent way when assessing all claims, and the ICA is currently advertising in national newspapers and online providing guidance onhow to make a BI claim.

If a claim is denied by an insurer, the Australian Financial Complaints Authority (AFCA) can make binding decisions on claims up to $1.085 million free of charge for policyholders, in contrast to the substantial fees sought by class action funders and lawyers.

Further guidance on making a BI claim is available on the AFCA and ASIC websites, and general information on this issue can be found on the ICA’s website.

Quote attributable to ICA CEO Andrew Hall:

The test case process has been utilised to provide certainty across a range of questions, and with each final decision by the courts, insurers will commence assessing claims that will respond to each ruling.

It is the position of the ICA that policyholders affected by COVID shutdowns are entitled to lodge a claim with their broker or insurer against their business interruption cover.

As we are also nearing the end of the financial year, lodging a claim in this matter can be complex and requires gathering  evidence – that’s why policyholders should start that process now.

While many claims will have to wait until the outcome of the second test case, lodging a claim now means that once that outcome is known a resolution can take place quickly, providing certainty for policyholders.

Friday, 25 June 2021

The Insurance Council of Australia (ICA) today acknowledged the High Court’s decision to deny special leave to appeal the NSW Court of Appeal’s judgment around the interpretation of pandemic exclusions in some business interruption policies. 

Insurers will respond to affected customers who have lodged business interruption claims on a case-by case basis, however the vast majority of claims will not be able to be finalised until further clarity is provided by the second test case. 

Insurers commenced a second test case in the Federal Court of Australia in February 2021 to test the application of further issues of pandemic coverage in business interruption policies. 

The second test case will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate, as well as policies that contain a hybrid of these type of wordings. 

The industry will meet the costs of policyholders in the second test case, as it did in the first test case and will for any appeal. It is anticipated that the trial of the second test case will take place in late August 2021. 

Policyholders should contact their broker or insurer directly if they require clarity on their particular circumstances and should gather and keep any evidence and documents to support any potential claim they may make. 

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

The Insurance Council acknowledges today’s ruling from the High Court.  

While we are disappointed, this decision on the first test case provides us with certainty and allows the industry to focus on the issues to be resolved through the second test case underway in the Federal Court of Australia.  

We encourage policy holders who are considering lodging a claim to contact their broker or insurer, and make sure they are keeping all the necessary paperwork. 

Once finalised, insurers are committed to applying the courts’ decisions in both test cases in an efficient, transparent, and consistent way when assessing claims.