Star Filed Complaint against Insurer for Denying Indemnity Claim

Australian casino operator The Star Entertainment Group filed a complaint in court after its insurance carrier, Chubb Insurance, refused to pay a legitimate claim in accordance to the insurance policy.

The casino and entertainment operator elected to turn to the court for the issue after Chubb Insurance denied a claim submitted by the Star in the first quarter regarding the impact from the coronavirus. Instead of providing an explanation in detail as to why the claim was considered untenable and not covered by the insurance policy, the insurance company tried to put the issue to rest once and for all, leaving the Star with no other option but to start legal actions in the Federal Court.

Material Impact from Lockdowns

In the official statement filed in the Federal Court August 21, the casino operator explained it continued to suffer economic loss in terms of a reduction in turnover and gross revenue and an increased cost of working. The Australian Stock Exchange (ASX)-listed company did not quantify its claim yet, but felt entitled to indemnity in respect of the economic loss under its policy with Chubbs.

Mid-March, the Star as well as other gaming and entertainment businesses were forced to shut down operations to support the effort of the New South Wales (NSW) Government to curb the further spread of the coronavirus. Star’s properties remained closed until the operator was allowed to reopen business in June, with certain restrictions in place. At the beginning of July, the Star removed some of the restrictions on its capacity, only to introduce new ones by the end of the month.

Insurer Denied Indemnity Claim

The casino operator claimed the insurance policy specifically covers risks of business operations and that lockdown restrictions had already interrupted and continue to interfere with its business. The inability to access its premises and conduct normal business due to the entry restrictions were seen by Stars as a reasonable claim, which was formally denied by Chubbs May 27.

Stars Entertainment and Chubbs Insurance made their first appearance at the Federal Court in Sydney before Chief Justice James Allsop, who ordered Chubbs to file and serve a concise statement in response to Star, in which to clearly and completely identify the basis for the denial of the indemnity claim. The insurer company was given a deadline September 22 to do that, and the case was left with no second appearance date being set.