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NZ ombudsman says BI legal challenge unlikely

The New Zealand Insurance & Financial Services Ombudsman has received around 230 complaints and inquiries related to COVID-19, including regarding business interruption (BI) but says legal action related to the cover is unlikely.

“In most cases, the BI cover will not respond, because there is no material damage and that was the message we gave to consumers,” Ombudsman Karen Stevens told

COVID-19 became a publicly notifiable under the Health Act on January 30, triggering standard business interruption exclusions for infectious diseases.

“Because of this clear exclusion, it would be very unlikely that there could be a legal challenge,” she said. “Of course, it will always depend on the policy wording.”

A partner at law firm Chapman Tripp, John Knight, says while many New Zealand policies have a disease exclusion, there are some are policies worth looking at in light of a UK High Court test case decision, which found in some cases cover did apply.

Some corporates without disease exclusions are examining their extensions related to prevention of access and action of public authorities, with such responses causing losses more than the disease itself, he told

“The impression I have is that insurers have generally said that there is no cover under these extensions, and some insureds are now looking at that declinature harder in light of the English test case,” he said. “It is too soon to predict whether any of these investigations will result in legal action.”

Insurance Council of New Zealand (ICNZ) CEO Tim Grafton says there has been no interest expressed by members for any issues to be resolved through a test case given the clear exclusions in the vast majority of policies.

“There would be very few instances where a finding similar to the UK High Court ruling would be applicable,” he said.