ICP calls on businesses crushed by COVID-19 shutdowns to register interest in legal action against insurers

Melbourne-retail-during-lockdown

Source: AAP/Darren England.

Litigation funder Investor Claim Partner (ICP) has today revealed plans to fund collective action on behalf of thousands of businesses with business interruption (BI) insurance policies against insurers that have rejected claims for COVID-19-related losses.

ICP, which specialises in claims management and funding services for insurance claims, is calling on businesses that suffered financial losses because of COVID-19 shutdowns to submit their BI insurance policies for review and register interest in a joint response to insurers.

ICP managing director John Walker says while today is the first day businesses can register, ICP and assisting law firm Clayton Utz have already had over 100 businesses contact them to address COVID-19 claims.

“There are lots of policies that have no cover, but there are lots that do, and so businesses initially need to know whether or not they’ve got a claim and we will do that on an obligation-free basis,” Walker tells SmartCompany.

ICP’s decision to fund collective action comes on the back of a test case in the NSW Court of Appeal last November, which determined that insurers could not rely on the standard ‘quarantinable disease’ exclusions they had been using to reject business interruption claims for losses caused by COVID-19 business closures.

What is more, the UK Supreme Court affirmed last week that businesses can make BI claims related to COVID-19 closures under UK law. It is an influential ruling given UK precedents are relevant to Australian legal proceedings.

Walker says the initial stage, which involves businesses submitting their BI insurance policies, involves no cost for businesses. Businesses simply need to follow the prompts at ICP’s website and ICP will provide its view on whether it thinks a business has a claim.

“Once we get through that phase we’ll know which policies we think have cover and which clients wish for us to act for them,” Walker says.

Prominent law firm Clayton Utz, which represented BI policyholders in the NSW test case, will assist the ICP and advise individual businesses on whether they have a legal basis for their claim.

Businesses with potential claims will likely have the option to enter into a negotiation process with their insurers, should their insurers agree, which will involve a fee.

“In due course, we will identify who has potential claims, and then we’ll be able to price a service which will involve initially a non-adversarial process,” Walker explains.

A non-adversarial court process is a non-court process that, with the consent of insurers, would resolve claims for clients in a faster and cheaper fashion than a full court process.

However, if ICP cannot reach agreements outside of court, it will then assist businesses with regard to initiating court proceedings.

To participate, businesses should submit their BI policies to the ICP if they:

  • Have not made a BI claim but held BI insurance before and during COVID-19;
  • Had a BI claim linked to the COVID-19 pandemic rejected by an insurer;
  • Made a COVID-19 BI claim that was accepted but with an unreasonable pay-out; and
  • Have not yet claimed for BI losses because they had been advised by an insurer or broker that BI claims arising from COVID-19 pandemic were not covered.

“Our message to business owners is do not take your insurer at its word when it says you’re not covered for BI losses. Check your policies closely, and get independent advice,” Walker adds.

The initial stage that involves collecting and assessing different BI insurance policies is expected to take two to three months.

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