Insurers warned of impact of COVID-19 as courts mull regulatory changes
Much of the impact of the pandemic for insurers is still to come, particularly around how various courts are adapting to a new normal and the subsequent regulatory changes, according to a report on the ongoing fallout of COVID-19.
Published by Global Insurance Law Connect (GILC) in March 2021, the report ‘Approaches to coronavirus’ includes views from its member firms in 17 countries. By drawing on members’ in-depth understanding of local jurisdictions and cultural, political and geographical challenges, the report offers an overview for the insurance industry.
In the report, Australian law firm Sparke Helmore said that “one of the most noteworthy developments [for the insurance sector] has been the Australian business interruption (BI) test case and the test case appeal (HDI Global Specialty SE v Wonkana No. 3 Pty Ltd trading as Austin Tourist Park [2020] NSWCA 296)”.
Currently, an application for special leave to appeal in the first test case is currently being reviewed by the High Court. However, in February 2021, a second test case was announced by The Insurance Council of Australia which confirmed that the Federal Court of Australia will test the application of further issues in relation to BI policies throughout the pandemic.
More than one member of GILC flagged up the recurring topic of changing working practices and business environment, which includes the accelerated leap forward in digitisation. This shift to a new normal has huge implications for the insurance sector.
Jim Sherwood, chairman of GILC, said: “Since our first report on the impact of COVID-19 in July 2020, we have seen changes in the way we live and work and have begun to understand the challenges for businesses and economies around the world. Our members here highlight the common themes which are emerging from coverage to regulatory change, and well as focussing on country specific issues.
“For example, disputes concerning business interruption have triggered challenges in numerous jurisdictions. Our members also look at the claims to come, not least in D&O where several members focus upon the likely increase in bankruptcy procedures leading to legal actions and claims under credit insurance. How are the courts adapting and what regulatory changes do you need to address? A recurring topic is the change in working practices and business environment, while the acceleration in digitisation has seen the industry move several years’ forward in just a few months.”
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