Claims For Interest And The Insurance Contracts Act

The Supreme Court of Victoria recently held that an insurer's bona fide view that it had a defence to an insured's claim under an insurance contract was irrelevant to determining the date from which the insurer is liable to pay interest to the insured under s57 of the Insurance Contracts Act 1984 (Cth) (Act).

The case involved a claim by the insured under a policy of insurance it held with the insurer relating to the loss of plant and equipment in a mine in Central Africa (the insured's loss). The insured's loss was first identified and notified to the insured's broker in March 2001. In early April 2001, the insurer appointed a loss adjustor who prepared a preliminary report which stated that "...the present situation represents a case of theft...". The report did not identify the person/party that committed the theft. Further correspondence was exchanged between the insured, the insurer and the loss adjustor between May 2001 and January 2003. Of significance was