The last remaining avenue for Australian businesses to pursue COVID-19 business interruption (BI) claims through class action has closed, following a Full Federal Court ruling that confirmed all four Federal Court class actions against insurers have now been formally declassed.
The judgment, Strand Fitness Pty Ltd v QBE Insurance (Australia) Ltd [2026] FCAFC 101, handed down on August 5, 2026, by Justices Perram, Halley, and Button, dismissed appeals by insured businesses against QBE Insurance (Australia) Ltd and the Underwriting Members of Syndicate 2003 at Lloyd’s. Combined with the earlier declassing of proceedings against Insurance Australia Limited (IAL, effective March 26, 2025) and The Hollard Insurance Company (effective March 19, 2025) – confirmed respectively by IAG and Slater and Gordon – the ruling closes a chapter of litigation that began with the First Test Case in November 2020.
For brokers, the practical consequence is direct: clients holding relevant policies who have not resolved their COVID-19 BI claims, or have not yet lodged one, are now directed to insurers’ internal complaints mechanisms and, failing resolution there, to the Australian Financial Complaints Authority (AFCA). AFCA’s compensation cap stands at $631,500 for complaints lodged on or after January 1, 2024. For businesses with losses above that threshold, individual litigation is the only remaining option, at the claimant’s own cost and without the cost-sharing structure a class action would have provided.
The ruling has an immediate flow-on for AFCA’s COVID BI complaint pipeline. According to AFCA’s published data – last updated March 25, 2024, the most recent figure available on the BI test cases page – AFCA had received 418 COVID-related BI complaints since 2020, of which 110 remained on hold because they could be affected by pending Federal Court class actions. With all four proceedings now declassed and no further appeal available, those held complaints can proceed to individual assessment.
That pipeline will enter AFCA at a time of record complaint volumes. Australians lodged a record 119,949 complaints with AFCA in 2025-26, the highest number on record and the third consecutive year complaints exceeded 100,000. General insurance accounted for 36,022 of those complaints, a 5% rise on 2024-25, when the category recorded 34,231 complaints – itself a 17% increase on the prior year. Rejected insurance claim complaints rose 47% in 2025-26, with delay in claim handling, service quality, and claim rejection the top three issues across all financial products.
The QBE class action alone involved approximately 36,000 insureds across 28 different policy wordings. As of July 2024, only 580 claims had been lodged, more than 500 of which related to hybrid clauses with a radius requirement. A court-ordered notification process drew 4,133 registrations of interest from potential group members – a gap that signals a substantial cohort of businesses that experienced pandemic losses but have not formally engaged with any claims process. The Lloyd’s class action was considerably smaller: 77 policies across 110 insured locations, with 10 claims submitted, all declined.
The Full Court described the disparity between the total policyholder base and actual claimants as “significant.” For brokers, that gap is a practical consideration: clients with unresolved or unlodged COVID BI claims may still have avenues through AFCA or insurer internal processes, subject to applicable time limits under the Insurance Contracts Act 1984 (Cth) and AFCA’s rules. Affected clients should be directed to seek independent legal advice without delay.
The court found the legal questions the applicants sought to resolve had either been substantially addressed by the two earlier test cases or were too dependent on individual facts to be resolved on a common basis. The court described what the class action structure was being asked to become: “This Court is not, nor would it be efficient to render it, in effect, an insurance claims handling clearing house.”
The ruling arrives at a point of heightened regulatory attention on insurer claims conduct. The Australian Securities and Investments Commission (ASIC) identified insurance claims and complaint handling failures among its 2026 enforcement priorities. ASIC deputy chair Sarah Court said the priorities were designed to address emerging risks and protect consumers from financial harm, with insurers among the sectors facing increased scrutiny over claims and complaints handling practices. Insurers now handling COVID BI complaints through internal processes and AFCA do so under active regulatory scrutiny. Brokers whose clients experience delays or inadequate responses have recourse through AFCA, and systemic failures remain within ASIC’s stated enforcement scope.
The Insurance Council of Australia (ICA) said it welcomed the outcome. “The decision confirms that insurance claims are more appropriately dealt with through insurers’ established claims handling and dispute resolution processes and, where appropriate, existing regulatory frameworks. Insurers remain committed to assessing claims fairly, consistently and in accordance with the law,” an ICA spokesperson said.
Leave to appeal was granted but both appeals were dismissed with costs. The applicants were represented by D Mitchell with A Zheng and S Crosbie, instructed by Gordon Legal. QBE was represented by J Williams SC with H Atkin, instructed by Allens. Lloyd’s was represented by D Collins KC with J Dooley, instructed by Clyde & Co.
