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25 September 2020
Chubb and other insurers have rejected the allegations made in a business interruption (BI) lawsuit filed by The Star Entertainment Group in August.
In a concise statement lodged to the Federal Court and seen by insuranceNEWS.com.au, the insurers say the casino’s BI claim was denied because COVID-19 is excluded in the Industrial Special Risks Insurance Policy they had issued to the business.
“Put another way, the peril in question, COVID-19 and its economic consequences, are already the subject of a specific provision of the policy which denies cover in respect of it,” the statement says.
“The Star cannot satisfy the extended definition of damage and has suffered no harm as it cannot access the insuring clause under the policy.
“As such, no question of indemnity being available under the insuring clause arises.”
Chubb is the lead insurer of the policy and first respondent in the BI lawsuit. Other insurers that took part in the insurance program and are named as respondents are AIG, Allianz, Allied World Assurance, Assicurazioni Generali, HDI Global, Liberty Mutual, Swiss Re International, XL Insurance and Zurich.
The Star in its concise statement says the policy insures its businesses and subsidiaries against certain special risks, including “certain risks of business interruption” and that its BI claim falls within the terms as described in the cover.
But the insurers reject the casino’s position. They say The Star has neglected to mention in its concise statement several important facts as well as referred to others in a manner which is “amorphous and infused with stated assumptions”.
In clause 9 of the Memoranda to Section 2 of the policy, the insurers say “there can be no sensible debate that the term ‘Quarantinable disease’ as it appears in the Infectious Diseases Clause should be construed in any way other than as a ‘listed human disease’.”
The clause specifically states a special provision will apply if “an occurrence of a human infectious or human contagious disease which the competent Local Authority has stipulated shall be notified to them, with the exception of any occurrence, whether directly or indirectly, arising from Quarantinable disease listed in the Biosecurity Act 2015, which are all specifically excluded hereunder.”
They say the reference to a “Quarantinable disease” is a term used in the Quarantine Act 1908, the predecessor to the Biosecurity Act 2015. The Biosecurity Act uses the term “listed human disease.”
The insurers also rejected The Star’s position that the Civil Authority Extension in the policy “extends to cover loss resulting from or caused by a lawfully constituted authority in connection with or for the purpose of retarding any conflagration or other catastrophe”.
They submit “damage is defined in the insuring clause as ‘loss, destruction or damage’ to buildings or other property used by the insured at the premises, being physical loss, destruction or damage.”
“The Star does not allege that damage of this nature has been suffered.”
The Star has said the insurers’ reasons for declining its claim, including grounds that the cover did not cover non-physical losses, were in breach of the policy.