In June 2019, Ella booked travel packages for her family to watch the 2020 Olympic Games in Tokyo. In March 2020, the International Olympic Committee (IOC) announced that the Olympic Games were postponed due to the COVID-19 pandemic. Ella and her family could not attend the new dates for the Olympic Games. Ella submitted a claim to her insurer for compensation for her non-refundable pre-paid deposits for the trip.
Ella showed that she had a valid claim under a section in her policy that reimbursed for unused travel or accommodation arrangements following the alteration of travel due to any unforeseeable event. However, the insurer declined her claim under an exclusion clause stating that there is no cover for claims arising out of interference from a Government, government regulation, or official authority.
Ella did not believe that the exclusion applied to her claim, but the insurer upheld their decision. Ella complained to FSCL.
Both parties agreed that Ella had a valid claim under her insurance policy. The dispute was whether the exclusion clause applied to the cancellation of Ella’s travel plans.
Ella said that the Olympic Games were not cancelled due to Government interference, but rather at the sole discretion of the IOC. Therefore, Ella believed that the exclusion clause was not applicable to her claim.
The insurer said that the postponement was a direct result of the recommendation of the Japanese government. Further, the postponement was made in agreement with the IOC, who the insurer believed was an official authority.
“Official authority” was not defined in the policy. We found that it was coloured by the preceding words of “government” and “government regulation”. In this context, our view was that official authority means a governmental, regulatory, or administrative body. The IOC is a non-governmental sports organisation, and we were of the view that it was not an official authority for the purposes of the exclusion clause.
The key issue was whether the travel plans were prevented, either directly or indirectly, by the Japanese government. We considered the official statement from the IOC, the statement from the Japanese Prime Minister proposing a postponement of the Olympic Games, and the Host City Contract (HCC). The HCC gave cancellation rights only to the IOC. It appeared that even if the Japanese Prime Minister had not proposed postponing the Games, the IOC would have still made the decision to postpone. The government did not pass any law or regulation preventing the Olympic Games. It was clear from the IOC’s official statement that the primary reason for the postponement decision was the health risk posed by the pandemic, rather than the Japanese Prime Minister’s proposal.
The insurer did not sufficiently establish that the postponement decision had arisen out of interference from a government, government regulation, or official authority. The insurer could not adequately show that the exclusion clause applied to Ella’s claim.
We said that the insurer should refund the costs incurred by Ella’s altered travel arrangements as per her policy. Once costs were established, the insurer was to reimburse them, less the applicable excess.
Both parties agreed to this outcome.
Insights for participants
The onus is on the insurer to establish that an exclusion clause applies to a claim. They must be careful not to apply the clause too widely.