GILC Business Interruption Report: Brighter times ahead for BI insurance as demand grows17 January 2023
Global Insurance Law Connect (GILC) this week launched its first global report on business interruption, providing insights from 19 countries on business interruption insurance in their domestic markets. The Report provides details on the key changes to the global business interruption market and provides a predicted outlook for coming years.
The Report finds that following the pandemic and despite the backdrop of high inflation, increased scrutiny on wordings and higher premia, there is now more clarity for both businesses and insurers around what can be expected from a business interruption policy.
In Australia, a small number of claims have been paid out by insurers since the pandemic began. These claims have typically been submitted by companies seeing recovery under specific covers, for example, event cancellation. Insurers have contested a number of claims, and these have led to litigation.
As Mark Doepel, partner at Sparke Helmore points out, “ Claim numbers have been low, although this is attributed to claimants adopting a ‘wait and see’ approach pending the resolution of the two BI test cases rather than decreasing demand. The test cases have and will continue to result in increased scrutiny of BI policy wordings by insurers and insureds. In the positive, the two test cases have created more certainty in the industry by confirming principles to be applied to each claim, albeit each matter will have to be determined on its facts.” Continued Mark Doepel, “BI policies will continue to be sold in the Australian market, potentially in greater numbers, given most small businesses are underinsured.”