ICA welcomes judgement in second COVID-19 BI test case

ICA welcomes judgement in second COVID-19 BI test case | Insurance Business Australia

ICA welcomes judgement in second COVID-19 BI test case

The Insurance Council of Australia (ICA) has welcomed the Federal Court of Australia’s judgement in the second COVID-19 business interruption (BI) test case that had gripped the attention of the whole industry for past few months.

In the summary of her judgement delivered via a live stream, Justice Jayne Jagot upheld the arguments advanced by insurers in eight of the nine matters in the test case.

The Federal Court found that the cover had been triggered, but it noted substantial issues around whether the policyholder could prove any relevant BI. In a separate case, it ruled that insurers could not rely on a section of Victorian property legislation to exclude liability.

“Accordingly, the insurers cannot rely on s61A to operate to replace references to the Quarantine Act 1908 with references to the Biosecurity Act 2015. Exclusions in the policies based on the Quarantine Act 1908, therefore, do not apply as COVID-19 was not a quarantinable disease under the Quarantine Act 1908,” Judge Jagot said in the live stream.

Representing the insurance industry, the ICA said in a statement that the judgement provides a significant step towards finalising other issues related to BI insurance in Australia.

“Insurers, including those not directly involved in the court proceedings, are committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims,” said ICA chief executive officer Andrew Hall.

Read more: Judgement announced in COVID-19 BI test case

The ICA and its members are reviewing the details of the test case, including the Federal Court’s decision, and will provide a further statement this week.

Meanwhile, the Court expects to receive an appeal regarding its decision due to the complex nature of the matter and the need to provide clarification to insurers and policyholders as quickly as possible.

As such, it has already set aside time in the second week of November 2021 for the Full Court to hear any appeal that may be filed by insurers or policyholders. The ICA confirmed that the insurance industry will meet the costs of policyholders in any appeal process.