IAG expects to release $200 million from its business interruption provision after the Federal Court last year ruled against claimants seeking to pursue a class action.

A claim involving IAG was one of four matters put forward as proposed class actions over declined cover for pandemic shutdowns. The court decision appeal period expired last month.

IAG said today that based on actuarial assessments and subject to board and audit review, it expects to release $200 million of the total $380 million allocated for possible claims.

“The remaining provision reflects the potential for further valid business interruption claims to emerge,” the company said in a statement.

Slater & Gordon, which did not appeal against the court’s declassing decision, filed matters for CMC Hospitality versus Insurance Australia Limited (IAL) and Vicki Field Swim School versus Hollard.

Gordon Legal has lodged appeals in Cody Gemtec Retail trading as the National Opal Collection versus the underwriting members of Syndicate 2003 at Lloyd’s; and Strand Fitness and others versus QBE.

Following court orders last month, notices have been placed on Slater & Gordon’s website and are being sent out to advise potential claimants with relevant policies of their options, and outlining court rulings on how parts of policies should be read.

“If you want to continue a claim against IAL yourself you will be able to rely on, as well as be bound by, these rulings in so far as they apply to your IAL insurance policy, unless you opt out of the class action,” the notice on the IAG matter says. Those wanting to opt out must do so by March 24.

Options for policyholders include requesting an internal review from the insurer, lodging a complaint with the Australian Financial Complaints Authority or starting individual court cases.

The time limit for starting an individual court case against IAL has been suspended from the time the class action started, but it will begin to run again on March 26.

Insurers had opposed having the matters heard as class actions, arguing industry test cases have resolved common issues and dealing with the individual matters separately is more efficient.

Justice Michael Lee, in a ruling delivered in September, was critical of the industry decision to pursue test cases rather than a class action in the first place.

“The insurers fastened upon a process that antedated the development of modern class action regimes. They sought to identify ‘test cases’, ran them in two courts, and then put in place ‘private’ processes of assessment, not subject to court supervision, which were said to be informed by the principles emerging from those test cases,” he said.

“The difficulty that has emerged is that the result of these test cases is not binding on those who were not a party to those proceedings. This has resulted in the present disputation which would have been unnecessary if different forensic choices had been made at the outset of this controversy.”

Justice Lee added that “unlike Lot’s wife, for present purposes, we must not look back – what has happened has happened” and the well-advanced private assessment processes have now become a more efficient mechanism of dealing with remaining issues.

“I am satisfied that in all the circumstances, the real issues in each of the class actions are now overwhelmingly individual and that each of the representative proceedings will not now provide an efficient and effective means of dealing with the claims of group members,” he said.

IAG’s provision release will be included in the net corporate expense line in the half-year results, due on February 13.