Reinsurance News

Suncorp confident in covid reserves after BI court win

21st December 2020 - Author: Charlie Wood

A Covid-related business interruption court case victory has prompted Australian primary insurer Suncorp to underline its belief that overall reserving for the pandemic continues to be adequate.

suncorp-logoThe federal court of Australia ruled in favour of Suncorp, via its Vero Insurance subsidiary, on a BI claim that had been denied on the grounds that pandemics are an uninsurable risk and premiums had not been paid to cover an event on the scale of Covid.

The exclusion clause in the particular Suncorp policy excluded cover for “any claim that is directly or indirectly caused by or arises from, or is in consequence of or contributed by highly pathogenic Avian influenza or any biosecurity emergency or human biosecurity emergency declared under the Biosecurity Act 2015 (Cth), its subsequent amendments or successor, irrespective of whether discovered at the premises of the breakout or elsewhere.”

Suncorp says the court’s interpretation is consistent with its position that cover for losses arising from a pandemic is a high risk for an insurer which would normally be excluded.

The primary insurance giant added that It is important to note that current reserving valuations do not take account of the potential for further COVID-19 lockdowns, as well as any unexpected outcomes from future litigation including any industry test cases.

“Suncorp is committed to working with Government, industry and the broader community to explore alternative frameworks to addressing pandemic risks,” said Suncorp Chief Executive Officer Steve Johnston.

“We recognise these are challenging times for small business and we have put in place a range of measures to support them through this period.”

Suncorp had previously outlined an expectation for the impact of COVID-19 across its general insurance portfolio to be broadly neutral for the first half of the 2021 financial year.

Taking into account the breadth and depth of the second Victorian lockdown, the group expected to recognise an additional $125 million provision for potential BI claims for the first half of the FY21 financial year. This took the group’s total provision to $195 million.

Print Friendly, PDF & Email

Recent Reinsurance News

Getting your daily reinsurance news from Reinsurance News is a simple way to receive only the reinsurance industry news that matters, delivered directly to your email inbox.

  • Only email is mandatory, but the more you tell us about yourself the better we can serve you in future!
  • This field is for validation purposes and should be left unchanged.

By submitting the form you are giving your consent to be emailed by us.

Read previous post:
International Group finalises reinsurance structure for 2021

The International Group of P&I Clubs has now completed its pooling and GXL reinsurance contract structure for 2021, after securing...