QBE 0.16% $12.47 qbe insurance group limited

QBE to honour Ansett policies

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    QBE to honour Ansett policies
    By Sharon Kemp
    May 21 2002

    QBE Insurance will have to honour previously rejected travel insurance policies on cancelled Ansett tickets.

    Sydney-based QBE dominates Australia's travel insurance market but has so far rejected claims for about 600 of 3000 policies issued four days before the grounding of Ansett on September 14.

    The insurer claimed the collapse was a foreseeable event, but it failed to notify all Ansett travellers about the policy restriction when they bought travel insurance.

    The Australian Securities and Investments Commission intervened after it had complaints from ticket holders.

    QBE also became entangled in a case adjudicated by the general insurance dispute resolution body, Insurance Enquiries and Complaints, which involves claims for flights booked using frequent flyer points. Details of the IEC case remain confidential.

    ASIC went further and stated yesterday that QBE might have misapplied the unforeseeable-event policy restriction.

    Although the enforceable undertaking rules out further action by the regulator, QBE may still be open to a legal action from individual policy holders.

    ASIC said QBE's post-collapse public statements that the policies were void might have discouraged policy holders from making a claim.

    QBE must set aside the restriction clause on unforeseeable events for new or rejected claims, write to Ansett travellers who were issued policies between September 10 and 14, and reconsider other claims related to the Ansett collapse.

    It is an unfortunate start to the week for QBE after last week's turmoil when investors suffered renewed angst about its exposure to the September 11 terrorist attacks.

    A media report questioned QBE's policy of taking on more of its own risk as a substitute for reinsurance because of expensive reinsurance premiums.

    QBE's stock slumped 3.6 per cent on Friday and closed steady yesterday at $7.24 after managing director Frank O'Halloran undertook damage control.

    Mr O'Halloran reassured investors that the amount owed to Ansett ticket holders was immaterial and was included in the 2001 accounts.

    He said QBE had formed the view that Ansett's collapse was foreseeable because almost every news medium carried stories on the likely demise of Ansett.

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