The focus of the class-action – which was launched in July – is business interruption insurance policies, underwritten by Lloyds of London, and whether or not they provide protection against closures mandated by the COVID-19 pandemic.
A ‘townhall’ webinar meeting has been scheduled for 4pm on Wednesday 18 August, accessible via the Gordon Legal website.
Andrew Grech, partner at Gordon Legal, commented, “We believe that the insurers have wrongly denied claims to thousands of jewellery businesses and gem merchants, and failed to support them when they needed it most.
“Accessing the payout that we believe they are entitled to will mean the difference between survival and failure of many businesses.”
Among those already represented is Cody Opal Australia, the parent company of the National Opal Collection (NOC).
The NOC’s business interruption policy included a clause providing coverage in the event of an “outbreak of a notifiable human infectious or contagious disease occurring within a 20 kilometre radius of the [premises]”.
However, a claim against the policy was rejected in May 2020, with the insurer asserting that the business’ losses – which Cody Opal estimates total more than $3 million – would need to have occurred as a consequence of COVID-19 cases within 20km of the premises, rather than “overarching factors resulting from the COVID-19 pandemic as a whole”.
Speaking to Jeweller, Grech said, “Underwriters at Lloyds of London are a large insurer of jewellery and gemstone traders in Australia and we believe that certain underwriters have failed to pay legitimate claims for extensive COVID-related losses incurred during lockdown measures.
“Based on the policy wording, it is our opinion that policyholders with certain policies held with underwriters at Lloyds have a strong chance of succeeding in a class action.”
Grech added, “Jewellers and gemstone merchants were hit very hard during the pandemic, as these non-essential stores were forced to close due to trading restrictions in our major cities. They have been severely let down by the underwriters who provided them with business interruption insurance through Lloyds of London.”
The Insurance Council of Australia (ICA) has appealed a separate NSW test case to the High Court, and insurers have “other avenues open to delay further,” according to Grech.
“We think a class action will help resolve the issue more quickly than would otherwise be the case. In our view, the class action is the appropriate vehicle to bring the claims of affected policy holders before the Court in an efficient way.”
The class action is being financed by litigation funding firm Omni Bridgeway, meaning that businesses who join the action – known as ‘Group members’ – are not required to pay upfront or out-of-pocket costs.
“If the proceedings are successful, as is expected, Omni Bridgeway is entitled to recover a commission which is paid out of the damages awarded,” Grech explained.
“Group members do not have to pay anything in the event that the class action is unsuccessful, as Omni Bridgeway agrees to pay any legal costs that might be awarded to Lloyds of London.”
The class action has been filed with the Federal Court with the first hearing expected to take place within weeks.
Gordon Legal has suggested Lloyds of London business interruption policyholders start the claim process and seek legal advice; business owners can submit their policy to Gordon Legal to see if they are eligible to join the class action.
With similar class-action lawsuits against different insurance companies a possibility in the future, the firm has encouraged all business interruption policyholders to attend the ‘town hall’ webinar.
Information and registration details for the webinar can be found here.
More reading:
Australian jewellery retailer joins COVID-19 class action lawsuit
Australian opal dealer challenges COVID-19 insurance rejection