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Clarity on second BI test case issues not expected this year

The Insurance Council of Australia’s (ICA) second test case on business interruption cover may not bring clarity until well into next year given legal timelines and likely appeal processes.

The case involving nine separate small business claim disputes lodged with the Australian Financial Complaints Authority (AFCA) was filed in the Federal Court last Wednesday. Insurers represented are Allianz, IAG, Chubb, Guild, and Swiss Re Corporate Solutions.

Berrill & Watson Principal John Berrill says the single-issue first test case is still working its way through legal avenues, with an application seeking leave to appeal before the High Court, and the second case involves more issues and greater complexity.

Mr Berrill says ICA may seek to go straight to the Federal Full Court, which would speed the appeals process, but an initial hearing may be months away and it’s likely the decision will again lead to a High Court appeal application.

“There will be no final decision on this second test case this year,” he told “That process will probably take one to two years to play out. Probably closer to the end of next year.”

The length of hearings and the timing of decisions will depend on the questions asked in statements of claim, and there will still be wording questions on individual policies to be decided after the test case result, he says.

“We are not even getting remotely close to the end of the controversies here and getting people paid,” he said.

An industry source also told that clarity on the issue may not be provided until the end of next year.

“There are nine claims, and about 20 points of law, and it will be virtually impossible for all 20 issues to be found for one side or the other," the source said.

“It’s likely to be appealed as far as it can be. The initial case could easily run for six months, and that’s just stage one.”

ICA says the second test case will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate, as well as policies with a hybrid of these types of wordings.

“Insurers want this second test case brought to the court as quickly as possible so the process can be started to give certainty to policyholders and the insurance industry,” CEO Andrew Hall said.

“Once final rulings have been obtained, insurers are committed to applying the relevant principles in an efficient, transparent, and consistent way when assessing customer claims.”