Insurers have argued in a NSW Court of Appeal test case today that business interruption pandemic exclusions are clear despite their references to a now repealed piece of legislation.

Senior Counsel Bret Walker says the use of Quarantine Act 1908 along with the wording “and subsequent amendments” shows insurers were plainly and clearly referring to “a statute which it was contemplated might change”.

Mr Walker told the court both the Quarantine Act and the replacement Biosecurity Act dealt with the same type of quarantinable diseases regime, and the earlier legislation could have been replaced with a less obvious name change.

“We should be able to ask rhetorically, and with success ‘what is in a name'?” he told the five-member court full bench.

Mr Walker also raised the concept of “absurdity” where an outcome based on actual language used would come up with a result that was obviously not the objective intention.

The test case, initiated by the Insurance Council of Australia (ICA) in consultation with the Australian Financial Complaints Authority (AFCA), consists of two separate small business claims lodged with AFCA as part of its dispute resolution process.

The first involves insurance provided by HDI Global to the Austin Tourist Park in Tamworth and the second is for business cover provided by Hollard for the Thrive, Health and Nutrition shop in the Melbourne suburb of Maribyrnong.

Queen's Counsel John Sheahan for the defendant insureds says the product was aimed at small business clients, that it was presented in everyday language and it should be taken that the policy “means what it says”.

“The court should hesitate before departing from the plain meaning of the language that has been used,” he said. “These are documents meant to be able to be understood by the reader.”

Mr Sheahan said the policy exclusion that encompasses declared diseases listed under the previous Quarantine Act is unambiguous, and the insurers case fails in the interpretation of the “subsequent amendments” phrasing.

He also rejected the absurdity argument in relation to cover being available for outbreaks of new diseases, rather than more tightly restricted.

“The insurer may have in interest in the list being dynamic rather than static,” he said.

Earlier, Mr Walker was questioned over a policy disclosure statement effective from January 1, with the bench suggesting it would have been “pored over” to see if it was suitable.

“Slightly facetiously, you can’t possibly proceed on the basis that people pored over this,” Mr Walker said, while noting the issues that can creep into vetted and lawyered documents.

“On any view of it this is not a document that it would be safe to say has been painstakingly and well considered as to all of its wording,” he said.

“None of that in the long run either helps or hurts us. It is a circumstance, which in our submission is as true, if not more true, of insurance policies as many other complex contractual instruments.”

The full bench has adjourned to consider its decision.

ICA CEO Andrew Hall said today the organisation is pleased the case was heard on an expedited basis and "looks forward to a swift determination".

"The case is an important step towards providing greater clarity to customers, insurers and regulators in the treatment of pandemic-related claims," he said.