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Covid-19 Pandemic

Dáil Éireann Debate, Wednesday - 3 June 2020

Wednesday, 3 June 2020

Questions (48, 97)

Niamh Smyth

Question:

48. Deputy Niamh Smyth asked the Minister for Finance if a matter regarding insurance during Covid-19 for a business (details supplied) will be reviewed; if the matter which is being faced by many businesses will be addressed; and if he will make a statement on the matter. [8318/20]

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Brendan Smith

Question:

97. Deputy Brendan Smith asked the Minister for Finance the progress to date in discussions with insurance companies in ensuring that claims are honoured in relation to business interruption; and if he will make a statement on the matter. [9242/20]

View answer

Written answers

I propose to take Questions Nos. 48 and 97 together.

I am aware that there have been many concerns expressed about how the insurance industry is responding to the needs of its business policyholders in these difficult times, in terms of honouring business interruption claims and with regard to whether forbearance and other flexible measures are being offered to them. I have considerable sympathy for such policyholders, however the Deputy should note that I have no legal authority to compel an insurer to pay a claim as this forms part of a contract between the insurer and the policyholder. However, as a general rule, I believe that insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage.  Insurers should engage with those businesses honestly, fairly and professionally to honour those elements of the policies covered, in line with the Central Bank’s Consumer Protection Code. The Deputies should note however that neither I, as Minister for Finance, nor the Central Bank have any role in adjudicating on such matters.  If there continues to be a disagreement between an insurer and a policyholder, then the appropriate channels for resolving them must be followed i.e. use of the Financial Services and Pensions Ombudsman or litigation.

Having said that, my officials and I have been engaging with the sector in an effort to get some much needed certainty for business policyholders. On business interruption claims, I wrote to Insurance Ireland on 27 March and indicated amongst other things that

(i) insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage; and,

(ii) that where a claim can be made because a business has closed as a result of a Government direction due to contagious or infectious disease, that the recent Government advice to close a business in the context of COVID-19 should be treated as a direction.

Insurance Ireland, on behalf of its membership, responded on 3 April and stated that it accepted both of my points. It did however indicate that each insurance policy is different and there may well be other factors which lead to the adjudication of whether a business interruption claim is valid or not, other than Government advice to close.  Following on from this correspondence, I held a teleconference with Insurance Ireland, on 17 April, where I reiterated that some insurers, by adopting a “blanket” rejection of all business interruption claims, were doing the industry significant reputational damage and were not treating customers fairly.

In addition, the Deputies should note that the Central Bank wrote to the CEOs of major insurers outlining its expectations of them in this crisis from a consumer protection perspective. This included the Bank’s belief that while most insurance policies are clear, if there is a doubt about the meaning of a term, the interpretation most favourable to the consumer should prevail. The Central Bank is continuing to engage with the non-life insurance industry on these matters and will continue to closely monitor the situation to ensure that firms are meeting the expectations as previously set out.

I would also like to set out my views on forbearance. I believe that insurers have a role to play in supporting their customers in these difficult times. My officials and I have had extensive engagement with the insurance industry over reliefs for businesses during the COVID-19 emergency. The outcome of this engagement is an agreement that I announced on 10 April whereby most of the key insurers in the Irish market - namely Allianz, AIG, AXA, FBD, Liberty Insurance, RSA, Travelers Insurance and Zurich - will ensure that a number of common forbearance measures are available to their business customers. It should be noted that this is a voluntary agreement, but my views are that the other major insurers in the Irish market should also sign up to this commitment.

The common measures included in the agreement are as follows:

(i) Forbearance commitments - insurers will reduce premiums for business customers to reflect reduced level of exposure as a result of COVID-19 restrictions for Employer Liability/ Public Liability and Commercial Motor. Insurers will also allow up to 28 days after renewal for payment.

(ii) Approach to business premises - insurers will maintain cover for unoccupied commercial buildings/ premises not in use due to COVID-19 restriction (for a maximum of 90 days). Appropriate supervision and security of the premises is required.  Insurers will also support requests for a change of property use during the crisis.

While I believe that the above agreement should assist many businesses in relation to their insurance, this will only happen if insurers deliver upon their commitments. Therefore, I asked Insurance Ireland to put in place a mechanism, which provides proof of delivery.  My Department received the first “Activity Report” on this issue from Insurance Ireland on 25 May. This Report shows that in the period 23 March to 4 May, Insurance Ireland members processed 4,093 forbearance requests for business customers worth a total of €5,242,349. I have asked my officials to seek more detailed information from Insurance Ireland on the nature of the forbearance being offered. It should also be noted that my Department is in regular touch with the Alliance for Insurance Reform on these matters.

In conclusion, I would like to assure the Deputies that my Department will continue to be as pro-active as it can be on these insurance issues and will continue to liaise with the Central Bank and Insurance Ireland on an ongoing basis.

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