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Insurers to seek rapid response on High Court appeal

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The Insurance Council of Australia (ICA) will seek a rapid decision on the validity of business interruption exclusions citing the Quarantine Act if the High Court agrees to hear its appeal on the issue.

ICA has decided to seek leave to appeal the NSW Court of Appeal judgment, which found exclusions citing the Quarantine Act and subsequent amendments are not valid in rejecting COVID-19 claims.

“If special leave to appeal is granted, the ICA would seek for the matter to be heard in the High Court as quickly as possible,” the group said last week.

Typically, it can take 3-4 months from point of filing to when a decision is made on whether an appeal will be heard, but the process can be hastened with an expedition request. The High Court has a summer recess throughout January.

ICA says pandemics were not contemplated for coverage under most business interruption policies, premiums were not collected to reflect the cost of cover, reinsurance was not generally available and reserves not established.

“Those business insurance policies that were intended to cover pandemics predominantly in the entertainment and health sectors, have paid out,” CEO Andrew Hall said.

“However, if the industry is forced to pay out for risks it has not collected premiums for, or sought reinsurance for, it would compromise our ability to provide the Australian business market with protection against other risks.”

ICA also intends to file a second test case that explores other policy issues not dealt with in the first case, including proximity and prevention of access, and is working with stakeholders to finalise the parameters.