By David Winning

SYDNEY--QBE Insurance Ltd. strengthened its risk margins after the U.K. supreme court dealt another blow to insurers facing business interruption claims related to the coronavirus pandemic.

QBE said the net cost of business interruption claims in the U.K. remained unchanged at US$70 million following Friday's ruling, but it would take a more cautious approach on potential claims in Australia.

"To restore that downside protection and to add significant additional buffer, the FY 2020 result will now include an additional US$185 million risk margin strengthening with respect to potential Australian business interruption claims," QBE said in a regulatory filing.

As a consequence, QBE said its total Covid-19 allowance is now US$785 million, including total risk margins of US$300 million. Covid-19-related costs are now expected to be US$655 million in the 2020 fiscal year, the insurer said.

On Friday, the U.K. Supreme Court upheld an earlier ruling in favor of policyholders with respect to the wording of one of QBE's policies. It also reversed a ruling in favor of QBE with respect to the wording of two more of its three notifiable disease policies.

U.K. courts have been considering a test case brought by the Financial Conduct Authority to resolve what the regulator said were "key contractual uncertainties" associated with business interruption cover.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

01-17-21 1737ET