The dust hasn’t even settled following Australia’s first business interruption (BI) test case – currently an application for special leave to appeal is before the High Court – and now a second one has begun in the Federal Court of Australia.
Welcoming the commencement of proceedings, the Insurance Council of Australia (ICA) said the second test case will examine the application of further issues in relation to pandemic coverage in BI insurance policies. The one heard in 2020 specifically looked at the application of the Quarantine Act exclusion.
In a release, the ICA cited Allianz, IAG, Chubb, Guild, and Swiss Re Corporate Solutions as the insurance companies participating this time around. Their lawyers have filed pleadings to formally commence a combined second test case, which consists of nine separate small business claims lodged with the Australian Financial Complaints Authority (AFCA).
ICA chief executive Andrew Hall noted: “Insurers want this second test case brought to the court as quickly as possible so the process can be started to give certainty to policyholders and the insurance industry. The nine cases included have been agreed following thorough negotiations with AFCA, which reviewed 14 cases presented by insurers for consideration.
“Once final rulings have been obtained, insurers are committed to applying the relevant principles in an efficient, transparent, and consistent way when assessing customer claims.”
Lodged with the Federal Court at AFCA’s request because of the range of jurisdictions represented by the claims, the second test case will determine the meaning of policy wordings as they relate to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate.
“The courts’ determinations will provide the clear direction and guidance required for decisions to be made on similar issues arising in other disputes,” added the ICA. “The industry is meeting the costs of policyholders in this legal process, as it is doing in the first test case.”