The NSW Court of Appeal ruled in favour of policy holders and held that certain policy exclusions could not be relied on in relation to business interruption claims and COVID-19.
The Insurance Council of Australia, which brought the test case along with the Australian Financial Complaints Authority, said that in consultation with its members and legal representatives, it would “urgently review the determination and specifically the grounds on which it could seek special leave to appeal against the decision to the High Court of Australia”.
Share trading in IAG was suspended after the announcement. QBE shares were down 4 per cent at midday and Suncorp was down 3 per cent.
Suncorp said that the decision did not mean that business interruption policies referencing the Quarantine Act would automatically respond to COVID-19 related claims and that each policyholder’s individual circumstances would need to be considered against various other clauses relevant to their policy.
QBE also said that its policies required a number of policy triggers to be met.
It said that including recoveries under the company’s reinsurance protections, the net cost of any business interruption claim in Australia was likely to be limited to $5 million for each occurrence.
Suncorp also said the $195 million it had set aside as a provisioning for potential business interruption claims related to COVID-19 took into account a potential unfavourable ruling from the court. It would not affect the total.Jump to next article