Reinsurance News

Re/insurers to appeal Australia’s pandemic test case verdict

22nd March 2022 - Author: Matt Sheehan

A number of major insurers and reinsurers, including Swiss Re, IAG and Chubb, are seeking to contest the verdict of Australia’s pandemic test case in the country’s High Court.

LawThese insurers and others filed documents for an appeal on Monday, according to reports from The Australian, as did two insured businesses involved in the test case.

The previous judgment delivered by the Full Court of the Federal Court of Australia on 21 February 2022 substantially upheld the arguments of insurers, finding that in most instances the insurers are not liable to indemnify the policyholders.

However, it decided that some businesses could make valid claims on pandemic losses on certain limited policies, provided the cause of losses could be identified.

It’s been reported that IAG is appealing a specific ruling on its client Meridian Travel, after the court determined that 90% of the businesses revenue was caused by COVID-related restrictions.

Tremor - The modern way to place reinsurance

The Insurance Council of Australia (ICA) explained that IAG is contesting whether JobKeeper payments are to be taken into account when calculating the amount of the insurance to the policyholder.

Although the trial judge held that JobKeeper payments should be taken into account, the Full Court took a different view, and the ICA views this as an important issue for policyholders and insurers throughout the industry given the number of businesses that participated in the JobKeeper program.

The option for these appeals by either the policyholders or insurers was agreed to as part of the original decision to seek an outcome from the courts through test cases, although the insurance industry will continue to meet the costs of the policyholders in the appeal process.

Andrew Hall, CEO of the ICA, commented on the appeals process: “While we understand there is frustration that the matter continues through the courts, we recognise the need for both policyholders and insurers to obtain definitive guidance from the courts as to how relevant business interruption policy wordings are to be interpreted and applied.”

Print Friendly, PDF & Email

Recent Reinsurance News