Casino operator The Star Entertainment Group has commenced legal action against Chubb Insurance Australia and other insurers, seeking compensation for business interruption (BI) losses suffered as a result of COVID-19 trading curbs imposed by governments.

A first case management hearing by web conference has been set for next Tuesday at 2:15 pm in the Federal Court before Chief Justice James Allsop.

The Star filed the lawsuit last month in the Federal Court in Sydney after the insurers rejected its BI claim made under the Industrial Special Risks Insurance policy they had issued to the business. Chubb is the lead insurer of the policy.

It says the insurers’ reasons for declining the claim, including on grounds that the cover did not cover non-physical losses, were “in breach” of the policy.

The Star, in its Concise Statement lodged with the court, seen by insuranceNEWS.com.au, disagreed with the insurers’ interpretation of what defines a “loss” as provided for in the BI section of the insurance policy, which runs until November 1 2020.

It says the policy insures its businesses and subsidiaries against certain special risks, including “certain risks of business interruption” and that its BI claim falls within the terms as described in the cover.

Insurers had told the casino operator the Civil Authority Extension in the policy refers to “loss” as a “physical loss” and that COVID-19 does not meet the “other catastrophe” terms contained in the policy.

They said that “other catastrophe” refers to a “sudden disastrous [event] causing physical damage such as floods or bushfires, rather than pandemics such as COVID-19 that evolve over time,” according to the Concise Statement.

“The Star maintains that those reasons do not represent the proper construction of the policy and that insurers’ denial of indemnity is accordingly wrongful,” the listed casino operator said in the statement.

“The Star is accordingly entitled to indemnity in respect of that economic loss under Section 2 of the Policy as extended by the Civil Authority Extension.”

It wants the court to “make the declarations specified in the application concerning the proper construction of the policy.”

The casino operator did not list a figure for the compensation it was seeking but says its business continues to suffer economic loss, including a reduction in turnover and gross revenue.

Last month the business reported a full-year statutory net loss of $95 million while earnings before interest, tax, depreciation and amortisation fell 22.8% to $430 million.

Other insurers named as respondents in the lawsuit are AIG, Allianz, Allied World Assurance, Assicurazioni Generali, HDI Global, Liberty Mutual, Picc Property and Casualty Company, Swiss Re International, XL Insurance and Zurich.

The Star is seeking compensation on behalf of its other entities as well including its property arms.