Law firm Gordon Legal has initiated a Federal Court case against underwriters at Lloyd’s of London and filed a class action lawsuit against QBE in Australia over business interruption (BI) claims related to the pandemic, according to reports from the Australian Financial Review.
Gordon Legal says the cases relate to claims from a range of businesses, including gyms, cafes and jewellery merchants, that were impacted by government-imposed lockdown measures.
Both QBE and the Lloyd’s market have already been required by law to meet claims obligations on certain BI policies in the UK, following the High Court ruling on the FCA’s test case.
But with many policyholders still out of pocket, its been expected that a wave of large-scale pandemic litigation could soon be directed at insurers.
In Australia, courts ruled last week against hearing an appeal from Suncorp regarding BI payments, and a second test case is being planned to clarify policy wording for a number of small businesses.
However, speaking with the Australian Financial Review, Gordon Legal partner Andrew Grech said that test cases alone will not be sufficient to resolve coverage issues for policyholders, and asserted that class actions were a necessary step to secure legally binding verdicts.
He said the class actions would examine separate issues too, such as the notion of consequential losses that may have resulted from an insurer’s initial refusal to pay out on a claim.
“This will be very important for a number of businesses in that predicament,” Grech told the publication.
The Gordon Legal partner estimates that losses from customers could potentially reach into the hundreds of millions of dollars. Of the 700 BI complaints that his firm has heard from customers, around 25% concerned QBE and more than 50 complaints concerned Lloyd’s.
According to FCA data, QBE has one of the lowest ratios of BI claims paid out versus claims received following the UK test case ruling, with Hiscox and MS Amlin viewed as being the worst offenders.