Australian insurers can’t catch a break as they continue to face COVID-19 pandemic-related business interruption (BI) class action lawsuits revolving around an “absolute stuff up” in their contractual fine print.
At least five legal firms are investigating potential class-action lawsuits against insurers over their denial of BI insurance payouts amid the pandemic.
Michael Herrmann, who owns a bicycle tour company in Sydney, said the class action is “going to be a fight to the end.” He had seen his business’s revenue drop by 95% since the beginning of the pandemic due to lockdowns and loss of international tourists as the country’s borders remain closed.
“Every time I’ve made a claim, they’ve waited to the last possible day to respond,” Herrmann said, as reported by ABC.
IAG argued: “Our policies weren’t written or designed to provide cover for a pandemic, so we need clarification on how they should be interpreted in light of the impact of COVID-19.”
Many BI policies state they do not cover revenue losses due to “diseases declared to be quarantinable under the Quarantine Act 1908 (Cth) and subsequent amendments.” However, the Commonwealth replaced the Quarantine Act with the Biosecurity Act 2015, which judges have pointed out in recent rulings.
Investor Claim Partner (ICP) litigation funder John Walker describes the Quarantine Act debacle as an “absolute stuff up” by the insurance industry.
“If they did not intend to cover pandemics, then to a certain extent I feel sorry for them, but that does not alleviate their legal obligations to the insured,” Walker said, as reported by ABC.
“It’s been 12 months since this pandemic started. There’s been negligible claims paid. It ought to change.”
