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Casino BI lawsuit: insurers say COVID was excluded

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Chubb and other insurers have filed a concise statement to the Federal Court outlining the reasons why The Star Entertainment Group’s claim for business interruption (BI) losses was denied.

They are being sued by the casino group after months of unsuccessful talks failed to settle the matter.

The insurers’ statement seen by insuranceNEWS.com.au states that COVID-19 is excluded in the industrial special risks policy issued to the casino group.

“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, as the lead insurer of the policy, is the first respondent in the lawsuit. The insurers that took part in the insurance program are AIG, Allianz, Allied World Assurance, Assicurazioni Generali, HDI Global, Liberty Mutual, Swiss Re International, XL Insurance and Zurich.

The Star says in its concise statement that 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 described in the cover.

But the insurers say The Star has neglected to mention in its concise statement several important facts, and also 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 “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 that “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 says the insurers’ reasons for declining its claim, including grounds that the cover did not cover non-physical losses, are in breach of the policy.

Chief Justice James Allsop has ordered the casino group to file an amended concise statement before October 20. The insurers are to submit their response before November 10. It must include a clear and complete identification of the basis or bases for the denial of the claim as made by the casino group.

The case management hearing, which was set for last Friday, has again been adjourned. It is now set for November 17.