Pharmacy Daily | Businesses unlikely to get BI payouts

PHARMACIES adversely impacted by the COVID-19 pandemic are increasingly unlikely to receive payouts under business interruption (BI) insurance cover, following a recent ruling by the Federal Court of Australia.

Pharmacy insurance specialist, Carollo Horton and Associates CEO, Giuseppe Carollo, told Pharmacy Daily that the protracted nature of the case was "playing to the favour of insurers".

The Full Court's ruling backed Federal Court Justice Jayne Jagot's conclusion in the second test case related to COVID-19-related BI claims in Oct 2021, that "the insuring clauses did not apply".

"It's been a long battle," Carollo said.

"There is still the possibility of a High Court appeal but it's increasingly unlikely that many businesses receive a payout.

"We understand it has been difficult not having the certainty around these decisions for many months now.

"There have been many issues concerning the interpretation of BI policies that had to be decided.

"This was the reason for the second BI test case."

Carollo noted that many pharmacy owners appeared pessimistic about the prospect of getting a payout.

"A lot of pharmacies are already resigned to that, [saying] 'we've moved on, we've got some Government benefits along the way and at least we were able to trade unlike other shops'," he said.

With both Carollo Horton and Guild Insurance's BI policy wordings referencing the Quarantine Act, Carollo said they were "potentially more able to make a payout" based on an initial NSW Court of Appeal test case ruling in Nov 2020.

"I think whatever the result, it'll affect both of them the same way," he said.

"So it's almost like the whole industry will get it or not get it, and it sounds like at the moment they will not get anything."

Carollo added that COVID-19 was an anomaly when it came to BI insurance, with insurers paying out for other BI claims.