1. The Insurance Industry’s PCA coverage ratio increased in the year ended 31 March 2021 to 1.71x.
  2. 2021 showed a yearly percentage change of -28.3% according to the APRA

Australia's robust insurance market is split into three sub-categories. These are: life insurance, health insurance and general insurance. These sectors are fairly independent, with most large insurance companies specialising in only one type.

Having said that, companies have recently widened their scope of application by segueing into a field that addresses more general services- including financial ones, and have consequently come face to face with fierce competition from private banks and other colossals within the investment industry.

Services such as income protection, for example, unequivocally serve as ‘gap-filling’ tools in areas where individuals may have otherwise required the use of a private financial organisation.

Government insurers do additionally provide a plethora of schemes which involve a more ‘general’ insurance policy- including workers’ compensation, vehicular insurance, and disability.

The Australian insurance sector reaped total profits exceeding USD $1.1B according to the APRA; this was 400M shorter than the year ending in March of 2020, a result that primarily stemmed from lower available investment income, the COVID-19 crisis, and natural catastrophe claims.

Judicial Challenge Favours Business Owners

The Australian legal system has been the recipient of prolific attention recently, been widely categorised as both ‘’conscionable and fair’’ by global investors.

The nation’s insurance industry lost a crippling legal dispute against the high number of businesses that were requesting compensation on account of losses accrued as a result of the unprecedented COVID-19 pandemic.

The relevant insurance companies originally responded to the lawsuit by arguing that the policies and financial schemes that the claimants were seeking to rely on were never designed to expand so far so as to cover business losses that sprung from viral pandemics.

Their accredited lobby group- the Insurance Council of Australia, attempted to disway further claimants from pursuing compensation by taking a ‘test’ case to court.

In a surprising yet fascinating judgement, the Australian courts favoured the nation’s business owners. The decision came down to legal technicalities and involved a significant amount of rigmarole, but it nonetheless attracted significant attention from business owners and investors from all over the world, who quickly crowned the Australian legal system as one of the most business friendly and fair in the common law sphere.

This has inspired a plethora of other, smaller business owners to join the fight against the Australian insurance industry, pledging to continue relentlessly until sufficient post-pandemic payouts are distributed.

A Denied Appeal?

The prominent Australian insurance industry- which could be liable for over USD $10B in COVID-19 related losses, attempted to appeal the aforementioned legal decision in a high court.

In late june of 2021, that appeal was denied, and shortly after Andrew Hall- the current Chief Executive of the ICA, publicly announced his dismay, but finished off by acknowledging that such a court decision at the very least provides the sector with adequate legal ‘’certainty’’.

At the same time, the insurance industry has initiated an additional ‘test’ case, which aims to pursue a great degree of legal clarification in relation to the exact proximity that must be applicable in scenarios that involved COVID-19 incurred losses.

Critics of the claim have responded by arguing that, in fact, setting a precedent that mandates such a ‘tight’ and inapplicable level of legal proximity would handicap their claims in the majority of cases. Claimants believe that they should be able to claim their losses on account of more broad and general circumstances- such as mandated closed borders or lockdowns.

Even though the case hasn’t been heard yet, market analysts and international business owners alike are quite optimistic of the Australian judicial system’s management of the general liability insurance industry.

A Final Overlook: Class Action Potential?

On the other hand, obviously the aforementioned decision will not mean that insurance companies will pragmatically start dishing out payouts and insurance fees independently.

The decision- albeit important, is not applicable to the majority of the tens of thousands of businesses that were negatively affected by the COVID-19 pandemic as it solely concerns the small number of issues that affected the Hollar and HDI Global Speciality SE claimants.

With insurers continuing to take every possible legal option available to them to avoid settling claims, there have also been talks about potentially launching class action suits in the months to come- although none have been initiated just yet.

Indubitably, the robust and and equitable nature of the Australian judicial system will play a pivotal role in ensuring that companies that were detrimentally affected by the complications of the COVID-19 pandemic are appropriately compensated in accordance with their policies, and will continue to proliferate global support and faith for the Australian legal jurisdiction.