The Insurance Council of Australia (ICA) business interruption test case will go straight to the NSW Court of Appeal following a joint motion by legal counsels on Friday.

Supreme Court Justice David Hammerschlag determined the case was of sufficient importance that it should be expedited and moved to the appeal court. That hearing is due to start on October 2.

“We are pleased the test case hearing is progressing as quickly as possible, and a judgment can be delivered that provides greater clarity to customers, insurers and regulators in the treatment of pandemic-related claims,” new ICA CEO Andrew Hall said.

“In most cases, pandemic exclusions are a threshold issue in Australia, given that most insurers have never contemplated coverage for pandemics, have not priced the risk or collected premiums for this risk.”

The test case consists of two separate small business claims lodged with the Australian Financial Complaints Authority as part of its dispute resolution process.

Court documents accessed by insuranceNEWS.com.au show the first claim involves insurance provided by HDI Global Specialty for the Austin Tourist Park, which has caravan and camping sites and cabins at Tamworth.

The 12-month policy started on February 28, with the business interruption cover excluding “any circumstances involving ‘Highly Pathogenic Avian Influenza in Humans’ or other diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendments”.

The second relates to a health retail business known as Thrive, Health and Nutrition, located in the inner western Melbourne suburb of Maribyrnong. The insured’s 12-month period of cover started on May 11 last year.

The Hollard policy wording also says there is “no cover for highly pathogenic Avian Influenza or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 (Cth) and subsequent amendments irrespective of whether discovered at the premises, or outbreaking elsewhere”.

The court case will test whether policy exclusions referring to the Quarantine Act and subsequent amendments still apply, given the legislation was repealed in June 2016 after being replaced with the Biosecurity Act 2015.

Insurers say the wordings “declared to be quarantinable diseases under the Australian Quarantine Act” should be read as “which are listed human diseases under the Biosecurity Act”.

If the court rules that the Quarantine Act exclusion is not valid, then a second issue will also be considered.

The documents say that would look at whether the exclusion “is enlivened” for listed human diseases determined under the Biosecurity Act 2015 as at the date of inception of the policies or during the respective periods of cover.

COVID-19 has been a listed human disease within the meaning of the Biosecurity Act since January 21 this year.