Star Entertainment Group Goes To Federal Court With An Insurance Company After Alleged Negligence

Article by : Helen Oct 7, 2020

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Updated: Dec 21, 2021

Star Entertainment Group took matters to Federal Court against Chubb Insurance company. The successful Australian company faced an obstacle stemming from the uncertainty that COVID-19 brings to a business.

They’re looking to receive compensation for the alleged negligence coming from Chubb Insurance. Complications from the situation led to a drop in earnings for the company. A lawsuit for Chubb and other insurers were all tied into the case.

The Star Entertainment Group is an Australian-based gambling company founded in 2011. They hold around 8000 employees and is one of Australia’s largest gambling companies. Star Entertainment Group is an accredited organization that finds itself in the ASX Top 200. Chubb Insurance is the largest publicly traded P&C insurance company and the largest commercial insurer in the United States. They do business with over 50 countries across the map.

Star reported a loss in the ability to access or use its premises to conduct regular business due to entry restrictions. Other problems that came about were trouble undertaking certain activities and opening some businesses. It’s stated that the policy should’ve covered the risk of business interruption. The policy went into effect at 4 pm on November 1, 2019.

Chubb Insurance denied the wrongdoing on their part. They placed the blame on Star’s part. The reason behind denying the claim is non-physical losses being in breach of the policy. Chubb stated that Star failed to mention several important facts in their concise statement.

Star Entertainment Group disagreed with what defined a loss in the BI section of the insurance policy. BI stands for business interruption. Clause 9 of the Memoranda in Section 2 of the policy was highlighted in the case.

There can be no sensible debate that the term Quarantinable disease as it appears in the Infectious Diseases Clause should be construed in any way other than as a listed human disease.

Insurers had told the casino operator that only a physical loss was able to be covered. They further went on to say that COVID-19 does not meet other catastrophe terms stated in the policy. Following the SARS outbreak, insurers excluded pandemics from their policies due to not being able to cover an all policy payout. Unfortunately, COVID-19 came around and brought unprecedented catastrophe with it.

Catastrophe in their Chubb’s refers to a sudden disastrous event causing physical damage such as floods or bushfires, rather than pandemics that evolve. The Star, on the other hand, is holding on to their position.

“The Star maintains that those reasons do not represent the proper construction of the policy and that insurers’ denial of indemnity is accordingly wrongful,” the listed casino operator said in the statement.

A spokesman for Star said he could not provide an amount for the total losses involved in the claim. He stated this when contacted by the Australian Associated Press. Other insurers found as respondents in the lawsuit are AIG, Allianz, Allied World Assurance, Assicurazioni Generali, HDI Global, Liberty Mutual, PICC Property and Casualty Company, Swiss Re International, XL Insurance, and Zurich.

The two parties met in Sydney, Australia, in front of Chief Justice James Allsop last month. Chief Justice Allsop ordered Chubb to file a file and serve a concise statement in response to Star, including clear and complete identification of the basis for the denial of the claim.

The result might be a favorable one for Star Entertainment Group. Another ending would be a win for Chubb Insurance. The severity and timing of COVID-19 made unforeseen circumstances. Time will tell more as the case progresses.