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- Insurance Australia (IAG) has entered a trading halt after a surprising ruling from the NSW Supreme Court of Appeal
- Insurance companies have been insisting that the industry should not cover COVID-19 claims
- However, the NSW Supreme Court rejected the appeal, leaving insurance companies very worried about the cost of the payouts
- The Insurance Council of Australia intends to appeal in the High Court of Australia
- Following this IAG entered a trading halt to consider the impact of the judgement and, if needed, plan a capital raise to cover the costs
- IAG shares last traded for $5.46 per share on November 18
Insurance Australia (IAG) has entered a trading halt after the NSW Supreme Court of Appeal indicated insurance companies must pay out COVID-19 losses.
Insures such as IAG, QBE and Suncorp insisted that pandemic costs should not be covered by the industry. However, just yesterday, the NSW Supreme Court rejected the claim, leaving insurance companies very worried about the cost of the payouts.
The court found COVID-19 is not a quarantinable disease (human diseases covered by the Quarantine Act 1908), leaving insurers unable to reject these claims.
However, the Insurance Council of Australia said it intends to appeal in the High Court of Australia. As a result, the hundreds of millions that could be paid out aren’t 100 per cent certain.
Today, IAG entered the trading halt to consider the impact of the judgement and, if needed, plan a capital raise to cover the costs.
The trading halt means IAG shares will be paused until Monday, November 23, or until an update is released to the market.
On the market, IAG last traded for $5.46 per share on November 18.
