Full Bench rules on BI exclusions
AILA President’s message – Cameron Roberts
The NSW Court of Appeal Full Bench has ruled against insurers in a business interruption test case that will have ramifications across the industry.
As Resolve was in the production stages, the five Full Bench judges’ decision was announced.
The ICA’s test case, lodged in consultation with the Australian Financial Complaints Authority (AFCA), consisted of two separate small business claims lodged with AFCA as part of its dispute resolution process.
The court found Covid-19 was not “declared to be a quarantinable disease under the Quarantine Act 1908 (Cth) and subsequent amendments”, so was not excluded from the disease benefit clauses.
They found the words “and subsequent amendments” did not extend to or include the Biosecurity Act, which was a separate Act.
Chief Justice Tom Bathurst and Justice Virginia Bell said the words “and subsequent amendments” should be given their ordinary meaning, “which is unambiguous and does not extend to a new enactment replacing the Quarantine Act and its particular mechanism for identifying, by declaration, certain diseases as serious and contagious”.
The court found the Acts Interpretation Act 1901 (Cth) did not support the insurers’ argument, either directly or by analogy. “That Act concerns statutory, as opposed to contractual, construction.”
CJ Bathurst and Justice Bell said: “Orthodox principles of contractual construction are not so flexible as to permit ‘declared to be a quarantinable disease under the Quarantine Act’ to be read as ‘determined to be a listed human disease under the Biosecurity Act’.”
Justice David Hammerschlag said: “The natural and ordinary meaning of the words in the disease benefit clauses do not involve an absurdity sufficient to justify a conclusion that the language should not be given effect. Notwithstanding the repeal of the Quarantine Act, the clauses still have a sensible, albeit limited, operation in respect of diseases declared under that Act at the time of its repeal. That result might be regarded as uncommercial, but it is not absurd.”
ASIC had previously told insurers to have plans in place to respond, if the decision went against them. Read more here.
You can read the full judgement here.
It is likely many insurers will now review policy wordings more closely.
UK test case on appeal
In a related case in the UK, the Supreme Court will hear an appeal, lodged by the Financial Conduct Authority (FCA), six insurers and an action group, against the English High Court ruling that insurers were wrong to reject claims from holders of some types of BI policies.
The hearing was scheduled to start on 16 November. You can read more in Insurance Journal.
The appeal will seek to clarify whether 21 policy wordings, affecting potentially 700 types of policies, 60 insurers, 370,000 policyholders and billions of pounds in claims, cover disruption and government-ordered closures to curb Covid-19, Insurance Journal reported.
ICA establishes indigenous forum
As part of recognition by insurers of the importance of balancing community expectations and the important role of insurance in the economy, ICA will establish an indigenous liaison forum.
The forum will advise the industry on indigenous-related issues and customer outcomes, support reconciliation actions, increase industry understanding of vulnerable customers, and increase knowledge of specific cultural and heritage concerns.
The forum will include representatives from insurers and indigenous organisations and will provide advice directly to the ICA board.
AILA welcomes this important step by ICA and the contribution it will make to increased inclusion and diversity in the industry. Read more here.
Unfair contract terms extended
Unfair contract term protections will be extended to insurance contracts from 5 April 2021.
ASIC has updated its information sheets on unfair contract terms protections for consumers and small businesses. Information sheet 210 (INFO 210) and information sheet 211 (INFO 211) provide details about how the unfair contract terms will apply to insurance contracts.
The protections follow the Federal Government’s enactment of the Financial Sector Reform (Hayne Royal Commission Response — Protecting Consumers (2019 Measures)) Act 2020.
It is important that the industry is fully aware of the impact of these changes and is well prepared for them before 5 April next year.
More information about how ASIC will administer the new law is available here.
Mental health survey
The Covid-19 pandemic is taking its toll on workers in the insurance industry.
Recruitment agency Hays conducted a workplace mental health and wellbeing survey that identified a 19% decline in insurance industry respondents who rated their current mental health and wellbeing as being ‘positive’ or ‘neutral’ compared to pre-Covid-19.
Overall, only 42% of more than 4,000 people surveyed rated their current mental health and wellbeing as positive, down from 63% pre-Covid-19.
The survey is a timely reminder to all of us, particularly those based in Melbourne, of how tough times are.
It will be great when we can finally get together again at events and conferences and I am sure that will contribute to improved mental wellbeing.
In the meantime, I ask everyone to look out for their fellow workers and keep in touch via email and phone to ensure your colleagues are okay.
2021 AILA National Board
I am pleased to announce the AILA Board and Executive was re-appointed at the 2020 AILA annual general meeting and subsequent board meeting.
The 2021 AILA Board comprises me as President, ably supported by:
Dan Robinson and Chris Rodd were appointed to the ex-officio positions of Young Professionals and AIDA representatives respectively.
I am particularly pleased 50% of the executive and 50% of the board is drawn from the insurance industry, which further ensures the best interests of the industry and those directly employed in it remain at the forefront of all we do.
Personally, I am honoured to have been appointed AILA National President for a third term. I thank my fellow board members for their support and their contributions over the past 12 months, perhaps AILA’s most challenging in its 35+ year history. I look forward to working with you all in 2021.
Season’s greetings to all AILA members and friends. Let’s hope for a better year in 2021.
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Resolve is the official publication of the Australian Insurance Law Association and