Quarantine Act v Biosecurity Act

I have received hundreds of questions and comments since the outbreak of COVID-19, or Coronavirus as it is better known.

I am currently over in Europe, and there is virtually nothing else on the news or in the papers other than this topic.

What comes up the most, is the position where an insurance policy refers to the Quarantine Act 1908, and has not been updated to the Biosecurity Act 2015 (Cth). With this new Act, the Quarantine Act 1908 was repealed.

Before I go further, I want to thank both Peter Cummins of Zurich and Carl Davies, for their input into the discussion.

I agree that this is very messy. I just wish the industry had changed all their wordings to keep pace with the changes in the legislation.

From the start this has always been chaotic, and with the benefit of 20 – 20 hindsight I wish that the industry had taken the 3+ years to change the wordings. Or add an endorsement changing the wording of the existing coverage from the old now abolished act to the new act, more in tune with the modern world we live in.

Some insurers did, others did not, while others were in the process as they did a reprint and or update of their wordings.

So, now to the history: what occurred was that Biosecurity (Consequential Amendments and Transitional Provisions) Act 2015, brings 3 Acts into 1 Act, which is now called the Biosecurity Act 2015. Under Australian Law it is correct that to delete an old Act, it is repealed. However, in doing this, they needed to bring in this Biosecurity (Consequential Amendments and Transitional Provisions) Act 2015, thus linking the Quarantine Act 1908 and Quarantine Charges (Collection) Act 2014, into one Act. I attach this “Transitional” Act for your information. 

The key issue to the question under, is on page 59 – PART 6. The Notified Disease falls under Section 2B(2) of the Quarantine Act 1908, Point 2(a). Despite the repeal of the Quarantine Act by this Act: (a) the direction continues to have effect. Same applies in Point 4. It is being argued that the Government did this in this way. As a result, a major reprint on all documents did not have to occur, noting there were 22 Acts.

As such, it may well be that an insurance policy that uses the words “Quarantine Act 1908” and has not been updated to the New Act, the Exclusion would still have effect.

The Amendment read in Parliament when this Act was passed, clearly stated “(b) the Quarantine Act 1908 to the extent that it continues to apply because of the Biosecurity (Consequential Amendments and Transitional Provisions) Act 2015”.

Part 6—Emergencies

59 Directions to manage epidemic

(1) Subitem (2) applies if a direction was in force immediately before the commencement day under subsection 2B(2) of the Quarantine Act.

(2) Despite the repeal of the Quarantine Act by this Act:

(a) the direction continues to have effect; and

(b) subsections 2B(3) and (4) of that Act continue to apply in relation to the direction.

(3) Subitem (4) applies if a direction was in force immediately before the commencement day, under an authorisation given under section 3 of the Quarantine Act.

(4) Despite the repeal of the Quarantine Act by this Act:

(a) the direction continues to have effect; and

(b) subsections 3(9) and (10) of that Act continue to apply in relation to the direction.

60 Directions to deal with emergency

(1) This item applies if a direction was in force immediately before the commencement day under subsection 12A(1) of the Quarantine Act.

(2) Despite the repeal of the Quarantine Act by this Act:

(a) the direction continues in force; and

(b) subsection 12A(2) of that Act continues to apply in relation to the direction.

It is my understanding that due to this concurrent act, that many insurers did not update their wordings immediately to the new legislation.

The impact on businesses –large and small– can be huge and this, in turn, has a knock-on effect on other businesses and organisations, and so it goes on. We have seen a huge drop in the stock market as a result and, as you learn in basic financial accounting, the share price is based on expected future cash earnings.

The fact of the matter, is that the insurance industry could not meet all the business interruption claims due to the outbreak of a pandemic, which has less impact on the economy and businesses than COVID-19 has already caused.

Hence, the introduction of the exclusion following the SARS outbreak in 2003.

With this background, you can appreciate that Insurers will rely on the exclusions in place in their policies, whether that is referring to either Act.