Reinsurance News

ICA denied special leave to appeal COVID-19 BI ruling

25th June 2021 - Author: Charlie Wood

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

The Insurance Council of AustraliaIts decision to contest the ruling that landed in favour of Covid-19-impacted businesses was first announced in December.

It was thought the ruling could see insurers unable to deny claims from policyholders whose business interruption cover included an outdated extension known as The Quarantine Act.

The firm notes how each insurer 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.

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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.

ICA has urged policyholders to 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.

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