Insurers’ battle over business interruption issues triggered by the COVID-19 pandemic will shift to a second industry test case to be heard later this year after the High Court today rejected any appeal on Quarantine Act exclusions, while other legal actions are also gathering pace.

The Insurance Council of Australia (ICA) had sought to overturn a NSW Court of Appeal test case judgment that found policy wordings citing the now repealed Quarantine Act 1908 could not be used to exclude cover for disruptions caused by the COVID-19 outbreak.

Application to appeal was denied by the High Court following a brief hearing today.

“While we are disappointed, this decision on the first test case provides us with certainty and allows the industry to focus on the issues to be resolved through the second test case underway in the Federal Court of Australia,” ICA CEO Andrew Hall said.

Documents filed to the High Court last year said Quarantine Act issues affected over 250,000 business interruption policies and claims estimated at $10 billion.

Suncorp said this afternoon that the High Court decision related to the ICA’s first test case did not mean policies referencing the Quarantine Act would automatically respond to COVID-19 related claims.

“Suncorp continues to monitor legal developments in relation to business interruption, including the second ICA BI industry test case,” it said in a statement to the Australian Securities Exchange.

The insurer’s $214 million provision for potential business interruption claims related to COVID-19 is not expected to be impacted as a result of today’s decision, it said.

ICA says insurers will respond to affected customers who have lodged business interruption claims on a case-by-case basis, but the vast majority of claims will not be able to be finalised until further clarity is provided by the second test case.

That case 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 that contain a hybrid of these type of wordings.

Gordon Legal Partner Andrew Grech says insurers have been taking every legal option to slow down the process and avoid settling claims related to business interruption claims triggered by the pandemic and that approach is likely to continue.

“After months of preparation we will commence a class action against two major insurers imminently,” he said today. “Regrettably it is now clear that the only way to force insurers to do the right thing by their customers in the shortest time possible is through the strength in numbers and collective power of a class action.”