Firm News

Whether a class action settlement is insurable depends on what it represents, not what it costs. The Federal Court has recently held that ANZ’s excess insurers were not required to indemnify the bank for $116.92 million paid to settle two class actions, or for the associated defence costs. The settlements constituted the return of premiums, commissions and interest that ANZ had charged its customers. As the policies did not cover liabilities of that character, there was no indemnity. The decision identifies two separate routes by which claims of this kind can fall outside cover: a carve-out from the definition of Loss, and an exclusion directed at the charging of excessive, undisclosed or otherwise improper amounts. The decision is important for all insurers writing civil liability and professional indemnity policies where the underlying claim, whatever its pleaded cause of action, is in substance about the return of fees, commissions or other amounts the insured charged and received.