AFCA rules against dentists in BI covid disputes
Two dental practices have lost disputes over covid-related business interruption cover, with the Australian Financial Complaints Authority (AFCA) finding insurers were entitled to decline the claims.
AFCA says it recognises that covid has had a devastating impact on small businesses throughout Australia, but it has been guided by the interpretation of policies as applied in the Federal Court in an industry test case.
“In the circumstances it is fair that the insurer be entitled to rely upon the terms and conditions of the policy to deny liability for the claim,” it says in response to both disputes.
Elements of the disputes, determined in favour of Suncorp, were examined in the light of court rulings on the Swiss Re International v LCA Marrickville test case claim.
In a Queensland dispute, the insurer was unable to rely on an exclusion wording that still cited the repealed Quarantine Act, but AFCA agreed the complainant hadn’t shown sufficient causal link.
A claim was lodged on March 30 under a hybrid clause offering cover “as a result of the closure or evacuation of the whole or part of the premises by order of a competent government, public or statutory authority” as a result of causes including the outbreak of a notifiable human infectious or contagious disease occurring within a 20km radius of the premises.
AFCA found that while the Government did order restrictions, and there were most likely cases within 20km of the premises, those cases were not the cause of the state-wide restrictions.
“The orders were not as a result of an outbreak at or within a 20km radius of the complainant's premises,” it says. “There is no reference to the complainant’s premises. There were no specific government orders specifying business locations.”
The decision also says dental facilities weren’t classed as non-essential under the government orders and communications from the Australian Dental Association and the Australian Health Protection Principal Committee (AHPPC) did not meet the “government, public or statutory authority” requirement.
In the Sydney dental practice dispute, the insurer says the complainant has not established a loss within the terms of the policy, and alternatively, it’s not covered due to an exclusion citing the Biosecurity Act 2015.
In that dispute the insurer had issued a supplementary product disclosure statement in February 2019 which replaced a Quarantine Act reference with a new clause citing the subsequent Biosecurity Act.
AFCA agreed that the policy terms had not been met, for the same reasons as applied in the Queensland situation, and that “even if the complainant could establish the closure or evacuation of the premises by order of a competent authority, the exclusion relating to a biosecurity emergency would apply”.
“The panel is satisfied that the loss or damage arose directly or indirectly as a result of a biosecurity emergency or human biosecurity emergency declared under the Biosecurity Act 2015,” it says.