Pandemic claims battle heats up, as QBE pays out $632m to UK businesses

As local court battles rage over business interruption insurance, QBE has already paid out $632m to UK claimants, with more to come.

Mas Barber Shop in Brunswick, Victoria, in November last year. Picture: Darrian Traynor/Getty Images.

As court battles rage in Australia over the payment of pandemic related insurance claims, new data from the UK reveals insurers have started paying thousands of claims.

Data from the UK Financial Conduct Authority reveals £352.1m ($632m) has been paid to 13,670 claimants, with much more yet to flow.

The FCA also reveals another 21,813 claims are yet to be processed or paid by UK insurers, in what is set to further crimp insurer’s balance sheets.

Australian insurer QBE, through its European and UK arms, has accepted 2521 claims from customers, but has so far only paid either in part or in full 399 claimants.

The Australian insurer’s UK and European arms are reportedly processing another 591 claims.

The news comes as QBE seeks to head off potential claims arising from the pandemic in Victoria, launching a bid last week to join court action underway by the broader insurance industry in the Federal Court.

The case seeks to test whether a statutory provision in Victorian property law can knock out attempts by businesses seeking to make claims under insurance policies that reference the defunct quarantine act.

A NSW Court of Appeals found against insurers in a court challenge last year, delivering a judgment that would see insurers who had sold policies referencing the Quarantine Act, which was abolished by parliament in 2016, liable to pay claims.

The industry has since appealed that case to the High Court of Australia, sparking a wave of court action that has now dragged in more insurers and more questions of legal wording.

Suncorp’s business insurance subsidiary was in the courts briefly on Wednesday as it brawls with a Victorian customer seeking to claim against its policy due to interruption to business caused by government restrictions to control the pandemic.

Rockment, trading as the Vanilla Lounge, a noted institution of the Oakleigh Greek cafe scene, has been pursuing Suncorp subsidiary Vero in the courts after the insurer knocked back its claims.

The business had claimed an earlier win in December last year after court found it could push forward its case, but that same judgment also narrowed the field on which businesses could seek to claim.

But the Judgement noted the court’s conclusion as to the meaning of the cause was substantially more favourable to Vero than to Rockment.

Separately, Sydney’s Star Casino was also in Federal Court on Wednesday, seeking to make a claim against its major insurer Chubb and seven other co-insurers.

Star has named AIG, XL Insurance Company SE, Zurich Australian Insurance, Allianz Australia Insurance, and Swiss Re international SE as additional parties to the case.

Maurice Blackburn partner Josh Mennen said the insurance industry in Australia was “dragging these issues out” to avoid or minimise potential payments.

“It’s more of the same and it shows that their approach is to throw everything at it legally and commercially and it’s in stark contrast to the approach taken by the industry and frankly the regulators in the UK which is already paying out claims,” he said.

“They are leaving no legal option unexplored.”