MEDIA RELEASE - 30 August 2021
30th August 2021: New research commissioned by Gordon Legal has shed light on confusion amongst SMEs about business interruption insurance, in particular whether they hold a policy of this nature and are eligible to claim.
The research found that almost one quarter (23%) of all businesses are unsure if they have a policy where they can claim Covid-related financial losses to their business, and of those who know they have a policy, a large proportion have not attempted to make a claim.
The research was released to coincide with the start of the second test case in the Federal Court which will investigate several issues as to the meaning of a range of business interruption policy wordings such as the definition, COVID outbreak proximity and the impact of government mandates on businesses.
Additional findings from the research:
Speaking about the research and the upcoming test case, Andrew Grech, Partner at Gordon Legal commented, “It is little wonder that SMEs are confused and deterred from claiming. Insurers are taking every legal option open to them to protract the legal process to avoid settling claims for a product that is supposed to paid within days. We saw evidence of insurers delaying with the appeal to the High Court, and there are many other avenues open to insurers to delay further, such as this next upcoming test case.
“Some insurers suffered a very significant loss only a few weeks ago in the first test case, when the High Court decided not to hear their appeal about specific business interruption policy wording. Despite that loss, thousands of business interruption insurance policyholders are still waiting to be paid.”
According to research conducted by ACA Research, between May 2020 and August 2020 70% of businesses reported a drop in revenue they attributed to Covid. This is the highest proportion reported over the 18 months that ACA has tracked the impact of Covid on SME revenue. During the July 2021 wave of research this figure dropped to 56%.
Concluding Andrew Grech commented, “Insurance companies may have scrambled to change policy wording during 2020 but up until this point, and during the peaks of the 2020 outbreaks we believe that the insurers have wrongly denied claims to thousands of businesses.
“We launched a class action against QBE and Lloyds of London because we, and our clients, believe that the best chance businesses have to recoup what is rightfully theirs, is through the strength in numbers a class action delivers.
“Thousands of other businesses who hold policies with other insurers may also be eligible for payouts. These business owners should claim, regardless of the advice given by insurers and brokers and seek legal advice.”
Further details are available on the Gordon Legal website https://gordonlegal.com.au/business-interruption-claims-class-action-investigation/
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