The hearing for the second business interruption (BI) insurance test case in Australia finally commenced yesterday, taking insurers and policyholders a step closer to having clarity and certainty on issues relating to pandemic coverage in BI policies during the COVID-19 pandemic.
The second hearing of the BI test case was supposed to commence on August 30. However, the Federal Court of Australia (Court) decided to move the hearing to September 06 as some policyholders had been facing difficulties obtaining verified government data and expert evidence concerning the location and prevalence of COVID-19 outbreaks.
The second test case, which will run until September 15, comprises nine small business claims from various business sectors and locations lodged with the Australian Financial Complaints Authority (AFCA) as part of its dispute resolution process. It will determine the meaning of policy wordings around disease definition, COVID-19 outbreak proximity, the impact of government mandates, and other policy wording matters.
The Insurance Council of Australia (ICA) has welcomed the commencement of the second BI test case hearing before the court, stating that it is a crucial step towards finalising the issue and providing an efficient, transparent, and consistent framework to process BI claims.
“Insurers acknowledge the frustrations of policyholders who have been waiting to have claims resolved. However, the unprecedented nature of this pandemic has meant court determinations have been necessary to establish the principles insurers need to process claims and resolve disputes,” said ICA CEO Andrew Hall.
Insurers represented in the second test case are Allianz, IAG, Chubb, Guild, and SwissRe Corporate Solutions. However, all ICA members will apply the court’s rulings in this test case and the first BI test case consistently when assessing BI claims.
“Insurers have taken a number of steps to ensure these claims will be prioritised when final rulings are made,” Hall said.
“If policyholders believe they have a claim against their business interruption cover, they are encouraged to contact their insurer or broker who will provide them with the information they need to lodge.”
The Court will hear a separate case brought by QBE regarding the interpretation of Victorian property legislation, which could impact BI policies written under Victorian law.