Today’s decision by the High Court not to review further appeals over business interruption coverage during the pandemic has largely disrupted the industry’s process, says the Insurance Council of Australia (ICA).
“Today’s High Court decision marks a significant milestone in a process that has focused on understanding the extent to which business interruption insurance provides coverage under the unprecedented conditions we have experienced over the past two and a half years,” said Andrew Hall, CEO. She said. Along with the first trial case ruling, the decision provides guidance to facilitate fair and consistent determinations, and insurers and brokers will communicate “promptly and directly” with policyholders who have submitted complaints affected by the ruling to explain the next steps, it says.
As reported in Breaking News today, the High Court refused to hear further appeals in three test cases, with two claims filed by policyholders and one by an insurer. The result means that the sentence of the Plenary dictated in February is maintained.
The Full Court essentially upheld the insurers’ arguments in four of the five questions in the evidence case which were appealed. In the other case, the hedge has been activated, but it is not clear whether a material loss has occurred due to business interruption. However, the contractor can provide more information. Today’s result also confirms the High Court ruling that JobKeeper payments are not taken into account to reduce insurance payments when a policy responds.
IAG, involved in two of the cases in the second test case, today called for the suspension of trading in its shares to allow it to consider the impact of the High Court’s decision. The company has already released $ 200 million of its business interruption supply, with $ 975 million held as of June 30.
The trial case saga began in 2020, with the first trial case of outdated policy formulations citing the Quarantine Act against insurers. The second looked at a wider range of issues, including the proximity of an outbreak to a company and the impact of government orders.
The ICA says that claims will ultimately be determined based on the sentencing principles applicable in the cases, as well as the wording of a particular policy. Berrill & Watson Director John Berrill says the full court has established a roadmap showing how companies can prove valid claims and, although test case examples have not been successful, other companies affected by the pandemic they should analyze their own policies and circumstances.
“We think there are thousands of companies that will still have valid claims,” he told InsuranceNEWS.com.au. “This is not the end of the ball game.”
Several class actions related to business interruption disputes may also proceed after being suspended pending the outcome of the Superior Court trial.
The High Court was also considering an appeal filed by The Star Entertainment Group in its dispute with Chubb and other insurers this afternoon.
