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Australian decision will not be a major disruption for insurers



Australian real estate / non-life insurers' potential disbursements for business termination claims following a test case from the New South Wales Court of Appeal will be addressed, says S&P Global Ratings Inc. "Depending on the insurer and depends on the specific insurance cover. Payments may also be subject to additional legal avenues," it said.

"Our expectation is that although it will be a hit for the current year's revenue, the credit rating will not be affected by conservative provision, reinsurance cover and maintenance of robust capital buffers."

The decision of the NSW Court of Appeal related to insurance contained exceptions that referred to the now repealed quarantine law of 1

908 rather than the Biosecurity Act 2015. As such, potential claims would probably be limited to policies that referred to the now redundant quarantine law rather than all claims of business interruption.

At the same time, S&P noted that the payment of business interruption claims would also be dependent on policy-specific wording and their application during various pandemics. a company was denied, if there was an evacuation as a result of the damage and if the business was restructured or continued to be open in another property.

The Australian Insurance Board and its members are currently deciding whether to appeal the decision to the High Court of Australia.

Asia Insurance Review is a sister publication of Business Insurance. More stories from AIR here.

More insurance and risk management news about the coronavirus crisis here .

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