Australian insurers and businesses are monitoring USA insurance claimsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Y2K threat still stalks as lawsuits begin in US
By JENNIFER FORESHEW
THE threat of insurance claims arising from the Y2K bug is still real despite minimal impact on business to date, a legal expert has warned.
Australian insurers and businesses are monitoring the outcome of several multimillion-dollar insurance claims brought by companies in the United States. Phillips Fox senior associate Andrew Sharpe said he was not aware of any Y2K insurance claims in Australia, but the risk had not yet passed.
"It is quite possible things have gone wrong that have not as yet translated into claims and losses, but have the potential to do so," he said.
Mr Sharpe said the possibility of delayed Y2K disruptions, such as data problems involving accounting systems, could still pose a threat to business.
Other critical dates apart from January 1, 2000, were still to come, such as February 29, 2000, December 30, 2000, and January 1, 2001, he said.
Insurance policies generally excluded at least direct losses arising from Y2K, putting a big onus on business to make sure it treated the problem seriously.
"I think, largely, Australia did a very good job in remediation. There was a lot of information available on Y2K, and those who assessed that it was a problem for their business did a lot to combat it," he said.
Corporate Australia was awaiting the outcome of several insurance claims made by large companies in the US to recoup Y2K remediation costs under sue-and-labour or similar clauses, Mr Sharpe said.
Such clauses give the insured a right, or in some circumstances a duty, to prevent a loss covered under their policy. The intention is the insurer will then reimburse the insured for costs incurred in preventing the loss.
"I would certainly expect that there are a number of directors of companies out there watching very closely the developments in America and that they if they have not already sought legal advice on their own situation will get advice as those developments continue," he said.
Mr Sharpe said the US remediation-type disputes presented a complex range of legal issues.
"I think people would find it very difficult to succeed on those arguments, depending on the particular policy in an Australian jurisdiction," he said. "If these sorts of claims met with any degree of success in the US, I think the local market would experience flow-through effects.
"But I think the insurers take a view that these claims will not be successful and that, as a result, we are not likely to see many brought in Australia."
Submitted for General Interest Discussion etc....
Regards from OZ
-- Pieter (email@example.com), January 25, 2000