AFCA set to consider more than 300 BI disputes

The Australian Financial Complaints Authority (AFCA) has a backlog of more than 300 covid-related business interruption disputes that it is set to consider in the wake of the High Court decision against hearing further appeals in the industry test case.

AFCA, which had consented to the test case process, had registered 340 disputes as of Sunday, of which 306 remained open.

The High Court on Friday refused special leave to appeal on the interpretation of certain policy wordings, leaving in place lower court rulings that had largely favoured insurers in the second test case. The first test case on wordings citing the outdated Quarantine Act, finalised last year, was won by policyholders.

“AFCA is reviewing the effect of these latest developments and will soon contact each small business that has lodged a complaint related to business interruption insurance and Covid-19 which has been on hold at AFCA pending the outcome of the test cases,” it says on its website.

The ombudsman service says it will help resolve each of the complaints individually, according to the particular circumstances.

“AFCA will also assess the effect on each of these complaints of class actions which have been filed in the Federal Court in relation to similar issues,” it says.

The Full Court judgment, which now can’t be further appealed, mostly found cover did not apply in the test case matters, while it also provided clarity around circumstances where a claim may be successful.

The decision also means that JobKeeper payments can’t be taken into account to reduce payments when insurers are calculating amounts due on a responding policy.

The Australian outcome on JobKeeper contrasts with a decision in the UK this week where the High Court found insurers were entitled to credit for Government furlough payments received by a pubs group.

In the UK, High Court decisions can be further appealed.

The UK business interruption test case brought by the Financial Conduct Authority largely found in favour of policyholders, but some separate legal disputes have continued including Stonegate Pub Company v MS Amlin and Others, where the High Court judgment was handed down this week.