The High Court has decided to deny special leave applications to appeal the Federal Court of Australia’s judgement on the interpretation of policy wordings in business interruption (BI) insurance test cases.
The first BI test case was resolved in favour of policyholders in June 2021, with the outcome that insurers could not rely on references to the Quarantine Act “and subsequent amendments” in policies to exclude COVID-related claims.
In March 2022, two policyholders filed applications for special leave to appeal to the High Court, which was taken before the High Court on Friday.
The second round of BI test cases saw the Federal Court uphold insurers’ argument in four of the five matters in the appealed test cases on February 21, meaning the insurers were not liable to indemnify the policyholders.
According to law firm Clayton Utz, only 12% of requests for leave to appeal have been granted since 2012.
The High Court’s rejection for the leave to appeal means the rulings earlier this year still stand. It was a move acknowledged by the Insurance Council of Australia (ICA), ensuring that its members have committed to applying the principles of the final rulings “consistently and efficiently” to all BI claims.
Andrew Hall, chief executive officer of the ICA, said that while the entire ordeal was not an easy or straightforward process, the final ruling will “establish the principles necessary to minimise disputes” in the future.
“Today’s decision by the High Court marks a significant milestone in a process that at its heart has been about understanding the extent to which business interruption insurance provides cover under the unprecedented conditions we experienced over the last two and a half years,” Hall said on Friday.
“Insurers are pleased that, coupled with the ruling in the first test case, today’s determination provides guidance to the industry and policyholders, to help facilitate fair and consistent determinations on claims,” Hall added. “Insurers and brokers will be communicating directly and quickly with policyholders who have made claims affected by the judgement to explain next steps.”
