The Insurance Council of Australia (ICA) is considering the implications of a Federal Court decision that found a policy held by The Star Entertainment Group did not provide business interruption cover for COVID-19 restrictions.

Chief Justice James Allsop determined the pandemic was not a catastrophe for the purposes of the policy, there had been no physical damage and the court application should be dismissed with costs.

“The claim for indemnity fails,” he said. “The policy, on its proper construction, does not respond to the claims as made.”

The Star sued Chubb as the lead insurer of the industrial special risks policy and other insurance partners for breach of contract after a claim for BI losses during the pandemic shutdown last year was declined.

The casino group, an ASX 200 company, had argued its civil authority extension provided cover for financial losses it sustained given the inability to use property and accept customers as a result of government actions to stem the COVID-19 pandemic catastrophe.

The judgment on The Star dispute comes just weeks ahead of the ICA’s second test case, focusing on claims lodged by SMEs. The matter will be heard in the Federal Court from August 30 to September 8.

“The ICA is considering the implications of this judgment and looks forward to the Federal Court providing further clarity to business and insurers when the second business interruption test case is heard,” a spokeswoman told insuranceNEWS.com.au.

“This test case concerns multiple issues as to the meaning of a range of policy wordings such as the definition of disease, COVID outbreak proximity and the impact of government mandates.”

Chubb declined to comment on last week’s court decision while The Star is yet to indicate if it will appeal.

“The Star notes the decision from Chief Justice Allsop,” a spokesman said. "We are reviewing the judgment and considering our position.”

The other respondents in The Star lawsuit are AIG Australia, XL Insurance, Zurich Australian Insurance, Allianz Australia, Swiss Re International, Assicurazioni Generali, Liberty Mutual, HDI Global, Allied World Assurance and PICC Property and Casualty.

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