Uncertainty surrounds WA gas claims
The explosion at Apache Energy’s Varanus Island gas processing facility on June 3 has created uncertainty around the validity of business interruption claims.
The explosion caused a 30% reduction in WA gas supplies, affecting businesses in the south of the state. Apache expects to return to full capacity by December.
Interruption Underwriting Agencies MD Leo Quoyle says that apart from large direct customers, many small commercial gas customers may find they have no access to business interruption cover because they didn’t lose their entire energy supply.
“Almost every policy says loss of supply,” he told insuranceNEWS.com.au. “Most businesses won’t have a business interruption at this stage, although there are many different policies. Some will respond, and some won’t.”
Allianz spokesman Nicholas Scofield says the insurer has taken in claims from large industrial and commercial users, but not from “indirectly affected” customers whose claims will be largely dependant on policy wordings.
He expects more claims in the next three to six months as costs are passed down the line to retail consumers of energy.
Some policy wordings mean cover is available for lost income as a result of an incident such as the Varanus Island explosion. For example, some companies may have been forced to use more expensive electricity to supplement lost gas supplies.
“If you’re paying more for energy, your costs have gone up and revenue stays the same,” Mr Schofield said. “That constitutes a loss of income. Some wordings that are very broad will capture what’s happened.”
Zurich spokesman Rob White says claims will be determined on a case-by-case basis and will also depend on the individual policy. He says uncertainty over the cause of the accident has further complicated coverage terms.
The explosion caused a 30% reduction in WA gas supplies, affecting businesses in the south of the state. Apache expects to return to full capacity by December.
Interruption Underwriting Agencies MD Leo Quoyle says that apart from large direct customers, many small commercial gas customers may find they have no access to business interruption cover because they didn’t lose their entire energy supply.
“Almost every policy says loss of supply,” he told insuranceNEWS.com.au. “Most businesses won’t have a business interruption at this stage, although there are many different policies. Some will respond, and some won’t.”
Allianz spokesman Nicholas Scofield says the insurer has taken in claims from large industrial and commercial users, but not from “indirectly affected” customers whose claims will be largely dependant on policy wordings.
He expects more claims in the next three to six months as costs are passed down the line to retail consumers of energy.
Some policy wordings mean cover is available for lost income as a result of an incident such as the Varanus Island explosion. For example, some companies may have been forced to use more expensive electricity to supplement lost gas supplies.
“If you’re paying more for energy, your costs have gone up and revenue stays the same,” Mr Schofield said. “That constitutes a loss of income. Some wordings that are very broad will capture what’s happened.”
Zurich spokesman Rob White says claims will be determined on a case-by-case basis and will also depend on the individual policy. He says uncertainty over the cause of the accident has further complicated coverage terms.