ICA urges businesses to submit claims for Covid interruption
The Insurance Council of Australia has urged businesses affected by the Covid-19 lockdowns to submit business interruption claims to their insurers.
The Insurance Council of Australia has urged businesses affected by the Covid-19 lockdowns to submit business interruption claims to their insurers.
It comes as the industry reels from a High Court decision that could see insurers fork out billions of dollars in pandemic payouts.
The High Court on Friday rejected arguments put forward by the insurance industry looking to overturn a decision in the NSW Court of Appeal over claims for business interruption arising from pandemic lockdowns.
The insurers had brought forward nine claims, covering policies from five insurers, seeking to clarify conditions that may expose them to further claims.
The test case process had been used to provide certainty across a range of questions, ICA chief executive Andrew Hall said.
“With each final decision by the courts, insurers will commence assessing claims that will respond to each ruling.
“It is the position of the ICA that policyholders affected by Covid shutdowns are entitled to lodge a claim with their broker or insurer against their business interruption cover,” he said.
The industry had taken its fight to the High Court after a 5-0 loss in the NSW Court of Appeal, which found that due to faulty wording some businesses were not excluded from making claims.
Insurers have argued their policies were never priced to cover pandemics, with the first test case brought to determine whether businesses could make claims for interruption to operations arising from the pandemic.
Industry figures suggest as much as 60 per cent of business interruption policies sold before the Covid pandemic referred to the defunct Quarantine Act, which was abolished by parliament in 2015.
While payouts directly linked to this test case are minor, the decision could influence several larger and more complicated cases before the courts.
“While we are disappointed, this decision on the first test case provides us with certainty and allows the industry to focus on the issues to be resolved through the second test case underway in the Federal Court,” Mr Hall said.
Most claims will have to wait until the outcome of the second test case, but lodging now would see a quicker resolution for policyholders once the court’s decision was known, Mr Hall said.
If a claim is denied by an insurer, the Australian Financial Complaints Authority can make binding decisions on claims up to $1.085 million free of charge for policyholders.
The comments come as insurers are facing multiple class legal challenges claims for knocking back business interruption claims.
Suncorp, which had provisioned $214m to cover business interruption claims arising from Covid-19, on Friday said it didn’t expect to be further impacted as a result of the High Court decision.
IAG chief executive Nick Hawkins said it would look to pay claims as quickly as possible.
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