Insurers operating in the Irish market have paid out €130 million to date on business interruption claims stemming from the Covid-19 crisis, fuelled by a landmark court rulings and pressure from the Central Bank, according to the regulator.
The Central Bank wrote to a number of insurers in February pressing them to pay out on valid business interruption claims, following landmark court judgments in Britain and Ireland in favour of companies affected by the economic shock caused by Covid-19.
The UK supreme court ruled in January that a number of insurers – including Hiscox, RSA and QBE, which write business in the Republic – were liable to pay out on certain policies after the country's Financial Conduct Authority (FCA) took a test case.
The High Court in Dublin ruled in February in favour of four publicans who challenged FBD on its refusal to pay out on its pubs policy. FBD has estimated that this will ultimately cost the company and its reinsurers a total of €183 million in claims and expenses, as the judgment has ramifications for about 1,100 other pub policy holders. As of the end of June it has already paid out €20 million in interim settlements, as FBD awaits a court decision in December on the final quantum of payouts.
Central Bank examination
Central Bank director general for financial conduct, Derville Rowland, told an insurance conference hosted by Deloitte on Wednesday, that insurers have paid out €130 million to date on to 4,371 policyholders. This figure includes 3,485 claims which have been fully settled, and 886 who have received interim payments.
A Central Bank examination that began last year found that 27 firms were actively providing business interruption insurance cover for infectious diseases across more than 200 individual policy wordings before the pandemic struck. While it was clear from the wording of many of these policies that Covid-19 wasn’t covered, the bank identified 31,000 policies that were “responsive to the circumstances of business interruption or interference related to the outbreak of Covid-19 in Ireland”, Ms Rowland said.
The insurers were ordered to contact the 31,000 policyholders after the FBD ruling in February and give details of how they could make a claim.
“Of course, it must be stressed that while a policy may be responsive, it does not necessarily result in a claim,” Ms Rowland said. “Many policyholders will not make a claim as their business may not have been interrupted; they may not have been reliant on their premises to continue doing business; or they may not have suffered losses as a result of Covid-19.”
For example, a number responsive policies are in respect of essential retail businesses, care and health facilities or residential property owners which were not subject to closure, she said.
