The Australian Securities and Investments Commission (ASIC) has issued advice on handling business interruption claims in light of the test case initiated by the commission and the Insurance Council of Australia (ICA).
In a letter to insurers, brokers, and Lloyd’s coverholders, ASIC confirmed that it has been working with the ICA, the Australian Prudential Regulation Authority (APRA), and the Australian Financial Complaints Authority (AFCA) to monitor the test case and other issues relating to business interruption insurance.
As part of its analysis, ASIC advised general insurers, brokers, and Lloyd’s coverholders to ensure that any information provided to policyholders about their coverage must be clear, accurate, and balanced.
“We strongly encourage general insurers, Lloyd’s coverholders, and brokers to communicate with policyholders in a way that not only meets minimum requirements not to mislead or deceive, but also helps Australian small businesses make appropriate and informed decisions about whether they should lodge claims for business interruption losses arising from COVID-19,” ASIC said.
Meanwhile, claims on policies without a pandemic exclusion, or containing a limited exclusion, must be assessed and, where appropriate, paid in a timely manner.
“If there are reasonable grounds to pay part of a claim but not to pay the full claim, we encourage general insurers and Lloyd’s coverholders to make an interim payment,” ASIC continued.
ASIC has also advised insurers and Lloyd’s coverholders to make a plan on how to respond to the outcome of the test case, including how to communicate with policyholders if the NSW Court of Appeal finds in favour of policyholders in the case.
“General insurers should also provide appropriate information to insurance brokers to pass on to small business policyholders,” it said.
