Allianz, Chubb & Swiss Re to participate in Australia's second BI test case

The Insurance Council of Australia (ICA) has launched a  second test case in the Federal Court of Australia to deal with the COVID-19 business interruption (BI) policy issues that were not addressed in the first test case.

The initial test case was heard in the NSW Court of Appeal last year regarding the application of the Quarantine Act exclusion to BI policies. An application for special leave to appeal in the first test case is currently before the High Court.

The insurers represented in the second test case filed with the court are Allianz, IAG, Chubb, Guild, and Swiss Re Corporate Solutions, and the claims cover a range of business sectors and locations.

Lawyers representing participating insurers have filed pleadings with the court to formally commence a combined second test case.

The case consists of nine separate small business claims lodged with the Australian Financial Complaints Authority (AFCA) as part of its dispute resolution process.

It will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate, as well as policies with a hybrid of these types of wordings.

Commenting on the case, Andrew Hall, chief executive of the ICA, said: "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."

Hall added: "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."

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