Assurance et réassurance
The weekly briefings are prepared to assist you with keeping up to date with the effects of any legislative, regulatory or general changes as a consequence of Coronavirus (COVID-19).
Clyde & Co has a dedicated COVID-19 Information Hub which hosts many articles from around the world that provide different perspectives and in-depth analysis on many of these issues.
ASIC has recently written to Australian general and life insurers to set out its expectations on how insurers should respond to the COVID-19 outbreak.
In monitoring the responses of insurers to COVID-19, ASIC has indicated that it will closely scrutinise how insurers handle COVID-19 related claims. To assist insurers, ASIC has indicated that insurers should take steps to ensure that their claims management staff do not intentionally or inadvertently discourage insureds from making claims that have arisen because of COVID-19. Where claims are lodged, there is an expectation that insurers will take a flexible approach to the management of these claims. For example, ASIC expects that claims will not be denied solely because of an insured's failure to notify their insurer of changes to material circumstances that have arisen because of COVID-19 and that insurers will waive or alter procedural claims requirements where COVID-19 makes compliance impractical. With ASIC to shortly commence gathering data from insurers on the handling and outcome of claims with a COVID-19 related loss event, insurers need to give careful consideration to how their claims management protocols will be applied to COVID-19 claims in anticipation of receiving close ASIC scrutiny over the course of the next few months.
ASIC has also indicated an expectation that insurers will not obtain windfall gains where COVID-19 has reduced the underwriting risks of certain policy lines. For example, where a reduction in travel has resulted in insurers bearing a reduced risk for travel and motor vehicle insurance, ASIC recommends that insurers consider reducing or refunding premiums on these policy lines as appropriate. ASIC also expects that insurers actively engage with insureds who have missed premium instalments during this time to consider measures to help affected insureds maintain cover rather than cancelling policies. Similarly, while ASIC acknowledges that COVID-19 is likely to result in the introduction of new pandemic exclusions, ASIC expects that such changes to policies will be clearly communicated to insureds upon renewal with a further expectation that no policies will be offered to insureds who are unlikely to be able to make a claim under them.
Over the last week, the Australian government announced a number of amendments to the eligibility criteria for the JobKeeper scheme to close a number of eligibility loopholes and other anomalies that excluded certain professionals. Broadly, these amendments include:
The Australian Taxation Office has also published the Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 (Cth) which provides a number of alternative means by which employers may calculate their decline in turnover for the purpose of determining their eligibility.
The House of Representatives Standing Committee on Economic recently held two days of hearings into the insurance industry. While these hearings were intended to scrutinise the industry on its progress in implementing the recommendations of the Financial Services Royal Commission, the Committee also took the opportunity to enquire into how the industry has responded to COVID-19.
Specifically, the Committee was particularly focused on how landlords and rent default cover will respond to the COVID-19 outbreak. The Committee members queried whether insurers intend to exercise subrogation rights to pursue tenants for lost rent and whether insurers will enforce requirements for landlords to evict defaulting tenants before they are eligible to make a claim for lost rent. The Committee also paid particular attention to the application of COVID-19 and other pandemic exclusions in policies, hearing from the Australian Financial Complaints Authority on complaints arising from the application of these exclusions in travel insurance policies. Insurers were also queried on their stances regarding the refunding of unused portions of premium for cancelled travel insurance policies, reductions and refunds for policies that have incurred a reduction in underwriting risk as a result of COVID-19 (e.g. motor vehicle insurance) and the scope of policies cancelled by SME insureds, including the benefits of providing affected SMEs with premium relief where their business premises are currently vacant.
While the Committee has not been tasked with developing recommendations for the government COVID-19 response to the insurance industry, this line of inquiry suggests that insurers should be prepared for governments and regulators to closely scrutinise the above issues over the course of the coming months.
Earlier in the month, the NSW Government introduced plans to fast-track the assessment of development applications and rezonings.
On 28 April, Premier Gladys Berejiklian, Minister for Planning and Open Spaces Rob Stokes and NSW Treasurer Dominic Perrottet announced the first tranche of accelerated projects through the Planning System Acceleration Program. The first tranche of projects can be found at https://www.planning.org.au/documents/item/10622.
These projects were assessed against a set of criteria which were developed by government, industry and community stakeholders, and reflects nation-wide principles agreed by State and Territory leaders through Council of Australian Governments.
The three essential criteria are as follows:
1. Jobs – does the project create jobs during and post construction?
2. Timing – specifically,
3. Public Benefit – can the project deliver or support public benefits?
More information about the criteria can be found at https://www.planning.nsw.gov.au/-/media/Files/DPE/Other/priority-projects-criteria-2020-04.pdf?la=en.
The Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) was made under the Retail Leases Act 1994 (NSW) and the Conveyancing Act 1919 (NSW).
The Regulation applies to commercial leases, being:
This does not include the following:
The Regulation offers relief to 'impacted lessees' which is defined as a lessee:
For more information please see Clyde & Co's article Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) published on 28 April for an in depth summary of the prohibitions, regulations and obligation to renegotiate.
From 27 April 2020, amendments to the Conveyancing Rules (made under section 12E(1), (4) and (5) of the Real Property Act 1990, temporarily allow paper land dealings, plans and Section 88B instruments to be signed electronically. The Conveyancing Rules can be found at https://www.registrargeneral.nsw.gov.au/__data/assets/pdf_file/0009/822546/Conveyancing_RulesCOVID-19_Pandemic_Amendment.pdf.
Together with the Electronic Transactions Regulation 2017, the changes allow land dealings to be signed electronically and witnessed by audio visual link during the COVID-19 pandemic,
The changes to the Conveyancing Rules will cease to apply on the repeal of Schedule 1, Electronic Transactions Regulation 2017.
This week, the National Cabinet has announced the National COVID-19 Safe Workplace Principles (Principles), which are available here. We summarise the 10 Principles below:
Pursuant to Principle 8, SWA has issued guidance materials regarding COVID-19 for workplaces (at https://www.safeworkaustralia.gov.au/covid-19-information-workplaces), including: duties under WHS laws, workers' rights, vulnerable workers, cleaning, working from home and mental health. Organisations should review these guidance documents in determining what is reasonably practicable in eliminating or controlling the risks arising from COVID-19.
Following from the positive tone in the National Cabinet's announcements from earlier this month, the Prime Minister confirmed in a press release on 29 April 2020 that restrictions were easing and the focus was now on ensuring that protections were in place to enable both lifestyles and the economy to return to normal. The Prime Minister also confirmed that baseline restrictions would be reviewed when the National Cabinet met on 11 May 2020.
In line with the National Cabinet's strategy to manage the easing of restrictions, a new mobile application was launched on 26 April 2020 called COVIDSafe. On 25 April 2020, the Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Emergency Requirements—Public Health Contact Information) Determination 2020 (Determination) was made regulating the collection, use and disclosure of the application's data. Importantly, the Determination limits the use of the data for non-health related purposes and prohibits employers from forcing employees to download the application.
Another aspect of the management strategy for the easing of restrictions is controlling the transmission of COVID-19 as students return to schools. On 25 April 2020, the Australian Health Protection Principal Committee (AHPPC) released an advice for school leaders containing practical advice on social distancing, management of the risks to vulnerable populations, hygiene, environmental cleaning and psychological wellbeing, in respect of teachers, support staff and students.
The States and Territories have implemented the easing of restrictions in various ways. The Northern Territory (with only 27 confirmed infections) has announced the most significant changes, which will take place under a three stage roadmap. Stage 1, which will commence on 1 May 2020, will see people in the Northern Territory return to participating in specified sports and leisure activities, attending outdoor religious gatherings, having visitors at their place of residence, and shopping for leisure. Stage 2, which is intended to commence on 15 May 2020, will see venues such as cafes, restaurants, indoor markets, salons, indoor training studios, libraries and art galleries reopen, so long as social distancing principles are adhered to.
Other States and Territories have announced minor easing of restrictions, such as WA, NSW and Queensland. For instance, in NSW, there has been no new public health order (at the time of writing), however, the State Government has announced that as of 1 May 2020, groups of two adults (with their children) may be permitted to visit any other house for a social gathering. In Queensland, as of 2 May 2020, Queenslanders will be able to participate in various recreational activities, visit national parks, and go for a drive for a non-essential purpose. Any non-essential activity will still need to take place within 50km of a person's place of residence and must adhere to social distancing principles.
Despite this, the States and Territories have continued to clarify and amend their public health orders/directions with respect to:
In earlier updates, we reported that NSW had made orders under its public health legislation to protect certain employees, such as healthcare workers, from being spat or coughed on, in response to increasing reports that such occurrences were happening within the community. Queensland has also enacted the Protecting Public Officials and Workers (Spitting, Cough and Sneezing Direction), effective from 27 April 2020.
The orders and directions can be accessed at the following State and Territory websites (as at 1 May 2020):
The Local Government (General) Amendment (COVID-19) Regulation (No 2) 2020 has been amended to defer the determination of fees payable to Councillors and Mayors from 1st May 2020 to 1st July 2020.
In recent years the aforementioned remuneration has been compared, at least in part, to the remuneration received by Directors of not-for-profit organisations. Covid-19 is putting extra cost pressure on local councils including supervision of closed playgrounds, beaches etc. The proposed relaxation of some of the restrictions may reduce some of these costs which in turn may impact upon the determined remuneration.
The Omnibus (Emergency Measures) Act 2020 (Vic) broadly amends certain Acts and temporarily empowers the making of regulations to make changes in response to the COVID-19 pandemic, notably to implement regulations to prohibit termination of certain eligible retail and commercial leases, provide support for certain residential tenants affected by a COVID-19, and allowing courts to modify their procedures. The temporary measures will apply for the duration of a moratorium period, which ends on 29 September 2020.
The Federal Court has given important clarification around its approach to litigation amidst the unprecedented disruption caused by COVID-19. As the Federal Court becomes increasingly adept at utilising videoconferencing technology to remain operational during the COVID-19 outbreak, a recent series of decisions demonstrate a reluctance to uphold an application for an adjournment that is founded in criticism of a virtual trial, and reveal that the Court’s ability to assess the credibility of witnesses during cross-examination has been enhanced by videoconferencing facilities.