Hospitality king Phil Hogan is locked in a fierce dispute with an insurer over Jade Buddha bar’s ’business interruption’ policy

The man behind a major Brisbane bar has called on the Federal Government to intervene on behalf of hospitality businesses as he fights his insurer for a multimillion-dollar payout.

Jade Buddha owner Phil Hogan

AS pubs, clubs, cafes and restaurants gingerly re-open on Saturday across Queensland, there’s a major drama playing out quietly behind the scenes.

Plenty of venue operators are locked in fierce disputes with insurance companies over their “business interruption” policies and whether they can successfully claim for staggering losses stemming from COVID-19.

At stake, both across the state and right around the nation, are hundreds of millions of dollars in potential payouts.

Back in 2005, following the SARS drama, insurance companies introduced general exclusions for losses related to infectious diseases or quarantine issues.

Incredibly, many leading insurers have continued to rely in their policy fine print on the antiquated Quarantine Act of 1908 to knock back claims today.

There’s just a wee problem here. That legislation was repealed in 2015 to make way for the Biosecurity Act.

VIRUS BATTLE

Brisbane hospitality player Phil Hogan, co-owner of the Jade Buddha bar, is going through this battle right now.

He and his brother Gary obtained business interruption coverage from Zurich back in late February, about a month after the first case of coronavirus was detected in Australia.

Phil Hogan at Jade Buddha bar

They believe they are covered for infectious diseases and are seeking a multimillion-dollar payment.

But Zurich have now twice rejected their claim even though the policy only refers to exclusions based on the now-defunct Quarantine Act.

Zurich maintains the Biosecurity Act is, in effect, an amendment of the previous law.

Yet that argument doesn’t wash with the Hogans, who are all too aware that precise language is sacred to insurers.

“There must be hundreds of hospitality businesses around the country in the same situation,’’ Phil told us yesterday ahead of Jade Buddha throwing open its doors at 11am on Saturday.

“But how many busted businesses can afford to take big insurance companies to court?

“In light of this, my brother Gary and I are now calling on the Federal Government to intervene like they have with rents and do something.

“All we’re asking is that they make an official determination on whether insurance companies are allowed to rely on the repealed Act.

“We’re also calling on other hospitality operators around the country to join this call.’’

A group of men drinking beer at 'Soy Restaurant' in Bondi Beach, Sydney, Friday, May 15, 2020. Pubs, clubs, cafes, restaurants, and places of worship are now able to welcome up to 10 people inside their doors under an easing of NSW's COVID-19 restrictions. (AAP Image/James Gourley) NO ARCHIVING

City Beat understands the cry for help has already landed inside the office of a key minister in Canberra.

The Hogan brothers’ efforts have also won the backing of the Queensland Hotels Association and the Brisbane City Licensees Association.

A Zurich spin doctor did not respond to a request for comment, while an Insurance Council spokeswoman merely said “the precise wording adopted in a policy is a matter for individual insurers’’.

A BETTER WAY

So what happens if the Federal Government decides not to get involved?

Can we expect courts to get clogged up with dozens of lawsuits or even a class action?

Brisbane legal eagle Mark Waller, a Clayton Utz partner who specialises in commercial litigation and insurance disputes, thinks there’s a better way.

“The insurers should set up some process to get this issue resolved rather going to court or the Australian Financial Complaints Authority,’’ he told City Beat.

“They should think about their exposure so the issue can be resolved without litigation.’’

Waller said the insurance industry’s wording bungle most likely stemmed from the issue simply “falling between the cracks’’.

Despite this conspicuous failure, he said some brokers and insurers are now wrongly telling clients they can’t lodge claims because of “pandemic exclusions’’.

Waller has seen policies that incorrectly describe the Quarantine Act as “amended’’ but, while the insurer’s intention is obvious, he said it’s “not relevant as a matter of law’’.

“In my view, it’s pretty clear. The best you can say is that it’s ambiguous,’’ he said.