IAG (ASX:IAG) shares halt trading after court rules COVID-19 claims valid

Do insurance companies like IAG have to pay out on COVID-related losses? New South Wales court says yes, and it has rocked the industry.
The post IAG (ASX:IAG) shares halt trading after court rules COVID-19 claims valid appeared first on Motley Fool Australia. –

asx shares in trading halt represented by stop symbol next to judge's wooden hammer

Trading was suspended on Insurance Australia Group Ltd (ASX: IAG) shares on Thursday morning after a court ruling that could have dire consequences for the insurance giant.

On Wednesday, the New South Wales Court of Appeal ruled that rejecting business interruption insurance claims on the basis of COVID-19 losses is invalid.

The decision was a shock for the industry, which thought that including COVID-19 as a “quarantinable disease” as defined in the now-repealed Quarantine Act would be sufficient to decline claims.

The Insurance Council of Australia (ICA) argued that regardless of wording, the spirit of the policies were meant to exclude pandemics.

QBE Insurance Group Ltd (ASX: QBE), which was also represented by the council in the court case, did not suspend trading of its shares.

The company stated to the ASX that business customers still must jump through other hoops to make a successful claim.

“Notwithstanding the ruling, QBE notes that the particular wording of QBE business interruption policies require a number of policy triggers to be met in order for policyholders to be entitled to indemnity for business interruption.”

Business disruption claims were expected to be capped at $5 million per occurrence, QBE added.

ICA has stated it’s considering an appeal to the High Court.

IAG and QBE have not disclosed how much this decision could impact their bottom line. But Suncorp Group Ltd (ASX: SUN) earlier this week set aside an extra $125 million to cover themselves for COVID-19 claims.

Suncorp stated to the market that, overall, it has $195 million allocated for potential claims.

“While the group continues to review the judgment, the test case outcome is not expected to affect the total business interruption provision.”

Both IAG and QBE shares have climbed more than 12% in the past month. Suncorp has risen about 8%.

The court case specifically referred to a claim made by a business customer to its insurer, HDI. But it acted as a test case for the entire industry since most insurers use similar wording in their policies.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post IAG (ASX:IAG) shares halt trading after court rules COVID-19 claims valid appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!