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AFCA set to act quickly on BI disputes

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The Australian Financial Complaints Authority (AFCA) says it will move quickly to resolve business interruption disputes related to COVID-19 once the outcome of the second test case is known.

Lead Ombudsman Insurance Emma Curtis says AFCA has liaised with the Insurance Council of Australia (ICA), insurers and complainants as the test case process has continued, and is ready to move ahead to resolve around 278 COVID-related business interruption disputes.

The Full Court on November 12 reserved its decision after an expedited appeal hearing. The initial judgment, largely favouring insurers, was handed down in the Federal Court on October 8.

“We are very much looking forward to hearing from the court. Everyone is hopeful of a decision this year, but of course the timetable is very much in the court’s hands,” Ms Curtis said at a members’ forum today.

“Once we know what that decision is, we will move very quickly to next steps and working out how we can unpause those disputes and move forward with them to reach a speedy resolution for the complainants and the firms alike.”

Ms Curtis says AFCA is also closely watching the impact of a suite of law reforms flowing from the Hayne royal commission that came into effect in October.

“As these reforms are bedded down in insurers’ systems, the coming months should reveal the effect of these changes on consumer outcomes, and perhaps the nature and volume of disputes,” she said.

“At AFCA we are considering how the law requirements affect our approach to resolving disputes and will develop approach documents where we think that will help firms and consumers understand our approach to common issues.”

Senior Ombudsman Chris Liamos says claims handling is likely to be one of the top issues to come before AFCA in general insurance again this financial year, particularly in the context of COVID, lockdowns and natural disasters.

Mr Liamos says insurers have faced challenges sourcing parts in both the motor and home building areas and following consultation with the industry and consumer stakeholders AFCA is finalising a fact sheet on home insurance claim delays and COVID.

“It will probably be modelled fairly closely to one of the approach papers we developed several years ago on motor vehicle claim delays that followed the tsunami in Japan,” he said.

Mr Liamos says assessing the particular circumstances of each case is critical in AFCA’s approach to the resolution of disputes.

“It is very hard to have a cookie cutter type situation,” he said. “The facts can be quite varied. Having dealt with thousands of complaints, in my experience, no two complaints are exactly the same.”