Major insurers Suncorp (ASX:SUN)
and Insurance Australia (ASX:IAG)
have both provided updates on their “business interruption” cases, in relation to the Covid-19 pandemic.
Suncorp acknowledged the Federal Court of Australia’s decision on the Insurance Council of Australia’s second industry test case, handed down last Friday. Suncorp said the ruling found that the insuring clauses were not triggered in eight of the nine matters, meaning the policies did not respond to Covid-19 business interruption claims in the first place.
The ruling also found that government subsidies such as JobKeeper would be taken into account in assessing losses. Given the complex nature of the matter, the court have planned for this decision to be appealed. Suncorp noted that time has been set aside in the second week of November for the Full Federal Court to hear any appeal.
“Whilst a positive judgement for insurers, Suncorp’s provision for potential business interruption claims relating to Covid-19 of $211 million remains unchanged pending any appeal process, “ said the company. Suncorp recommend that customers lodge any Covid-19 business interruption claims they have.
IAG also acknowledged the Federal Court of Australia's judgment in the second business interruption test case, handed down last Friday.
“The court found in favour of insurers on a significant number of policy wording questions and for policyholders on other questions. The judgment is detailed, and a comprehensive analysis is required to assess the impact, noting it will vary by insurer, “ said the company
The court has also set aside time in November to hear any appeal in the Full Federal Court, to enable any appeal judgment to be finalised before the end of the year or early in the new year. IAG is reviewing the judgment to determine whether to appeal any aspect of the judgment. It will also consider the potential impact on IAG’s business interruption provision announced in November last year.
Shares in Suncorp (ASX:SUN)
are trading 0.5 per cent higher at $12.76. Shares in Insurance Australia Group (ASX:IAG)
are trading 3.8 per cent higher at $3.59.