A slew of Australia’s biggest insurers have told the Federal Court that businesses disrupted by COVID-19 do not qualify for billions of dollars in compensation because their losses are not sufficiently linked to virus “outbreaks” or government restrictions.

An army of barristers for Allianz, Chubb, Guild, IAG, QBE and Swiss Re made the argument on Wednesday as part of a landmark legal battle to protect insurers from paying out some of the thousands of “business interruption” insurance claims made in the pandemic.