Insurers hit by court’s COVID claim ruling

A court decision that means thousands of businesses crippled by the pandemic should receive compensation has prompted insurer IAG to suspend trading of its shares and rivals’ share prices to drop.

The impact of the NSW Court of Appeal’s decision was unfolding on the Australian share market on Thursday.

The court on Wednesday ruled insurers could not deny pandemic-related claims, creating the possibility of huge costs for insurers.

The Insurance Council of Australian and the Australian Financial Complaints Authority filed proceedings in August.

Shine Lawyers commercial disputes practice leader Michael Lalji said some insurers tried to exclude the coronavirus from business interruption insurance policies.

The ruling was a major setback for insurers, he said.

QBE shares on Thursday were down 4.22 per cent to $9.97 at 1200 AEDT.

Medibank Private dropped 1.02 per cent to $2.91.

Before the market opened, IAG suspended trading of its shares.

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