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Bank wins appeal over indemnity claim

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The Bank of Queensland (BOQ) has won in its legal appeal to make an indemnity claim from its civil liability policy.

Early this month the NSW Court of Appeal overturned the decision by a Supreme Court judge who had ruled the bank was not entitled to seek indemnity for $6 million it paid to settle a class action filed by 192 investors.

The appeal court directed AIG — the lead insurer in the civil liability policy issued to BOQ — and Catlin Australia to agree on a settlement amount including interest.

Last November Justice James Stevenson had found in favour of the insurers. The insurers maintained the bank had no grounds to be indemnified because the liability policy came with a $2 million deductible that applied individually to each of the 192 investors.

Since no one single claim exceeded the deductible amount, the insurers argued they were not liable for the losses BOQ had incurred.

Zurich, which was also a defendant in the lawsuit, had opted to settle with BOQ during the court proceedings.

But the appeal court ruled AIG and Catlin are liable for the losses and must indemnify the bank.

It says while there were multiple claims, they must be assessed as a single claim within the meaning of the insurance policy, which has a limited liability of $40 million for all claims and a retention of $2 million for each claim.

“The multiple claims arose out of, or were based upon or attributable to, one or a series of related wrongful acts and should therefore be aggregated, with the result that only one retention was applicable in respect of all of the claims,” the appeal court judges said in their ruling.