Reinsurance News

Australian High Court agrees to hear arguments in BI test case

25th March 2021 - Author: Charlie Wood

The Insurance Council of Australia (ICA) has welcomed the High Court’s request to hear arguments on the application for special leave to appeal the NSW Court of Appeal’s recent judgment in the first business interruption test case.

coronavirus-covid-pandemic-virusThe ICA notes how the insurance industry still feels pandemics were not contemplated for coverage under most business interruption policies and that the Quarantine Act exclusion excludes COVID-19 related claims.

While arguments will be heard on a date to be determined in May or June at the earliest, the ICA says there are other issues concerning the interpretation of business interruption policies that also need to be resolved to determine whether policyholders will ultimately be covered, which is why a second test case has been commenced in the Federal Court of Australia.

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 Federal Court is reportedly expediting the second test case, proposing that the trial take place in the first half of September and any appeal be dealt with the Full Court of the Federal Court in the first week of November.

Andrew Hall, CEO, Insurance Council of Australia, said, Today’s decision is a welcome next step in this important process and the insurance industry looks forward to presenting what we believe is a compelling case based on a solid legal framework.

“Given this issue relates to a policy exclusion for which insurers have not been collecting premiums, seeking reinsurance or collecting reserves, there is a strong public interest benefit in the High Court hearing oral arguments.

“Once final rulings have been obtained from the courts, insurers are committed to applying the relevant principles in an efficient, transparent, and consistent way when assessing claims.”

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