The Suncorp Group Ltd (ASX: SUN) share price is pushing higher today despite being dealt a blow in the High Court.
At the time of writing, the banking and insurance giant's shares are up 1.5% to $11.06.
Image source: Getty Images
What has happened?
This afternoon Suncorp provided the market with an update on its business interruption insurance.
According to the release, the High Court of Australia's has stated that special leave to appeal will not be granted for the Insurance Council of Australia (ICA) first industry test case. This test case relates to the application of the Quarantine Act exclusion to Business Interruption (BI) policies.
This means that the High Court of Australia is upholding the NSW Court of Appeal's November 2020 judgment. As a result, certain policy exclusions referencing the "Quarantine Act and subsequent amendments" cannot be read as references to the Biosecurity Act, and therefore cannot be relied on in relation to COVID-19 BI claims.
However, Suncorp notes that the decision does not mean that policies referencing the Quarantine Act will automatically respond to COVID-19 related claims. Furthermore, the company also advised that it continues to monitor legal developments in relation to business interruption. This includes the second ICA BI industry test case, which is due to be heard later in the 2021 calendar year.
How will this impact Suncorp?
Suncorp has already prepared for this eventuality so the damage from these claims has already been taken into account.
The release explains that a provision for potential business interruption claims related to COVID-19 of $214 million was reported with its interim results in February this year. This provision amount is not expected to be impacted as a result of today's decision from the High Court.
Though, the company will complete a full review of its provisions as part of its normal processes to prepare its full year results. It has also recommended customers lodge any COVID-19 business interruption claims they may still have and will assess them as expeditiously as possible and in accordance with the policy terms and circumstances.
