Dáil Éireann Debate, Tuesday - 28 July 2020
268. Deputy Marc MacSharry asked the Minister for Finance the steps business owners should take whose respective insurance companies will not pay out on claims for business interruption due to Covid-19 restrictions; and if he will make a statement on the matter. [18893/20]
View answerI 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, including in terms of honouring business interruption claims. At the outset, I should remind the Deputy that neither I, nor the Central Bank of Ireland can direct or require that insurers cover claims, including those resulting from infectious diseases such as COVID-19. Furthermore, it is not a matter for the Government or Central Bank of Ireland to adjudicate on the validity of such claims.
Whether a business can make a claim in relation to loss of earnings because of closure due to COVID-19 will depend on the specifics of its policy. I have made it very clear as a general rule insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage. I believe that 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..
I understand, however, that many businesses do not routinely have infectious diseases covered as part of their standard policies. In the case where infectious diseases are covered, there may be other considerations which will influence the decision of an insurer to not pay a claim. It is important therefore for businesses to engage directly with their insurer or broker on this matter, and where they believe an insurer has incorrectly rejected their claim, they should either consider referring the matter to the Financial Services and Pensions Ombudsman (FSPO) for adjudication or where their claim is in excess of the FSPO €3 million limit they may wish to consider legal action. I understand that this is already happening in a number of cases.
The above said however, 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 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.
The Deputy should also 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.
The Deputy should be assured that Minister of State Fleming and I will continue to monitor the business interruption issue and will engage appropriately with the Central Bank of Ireland on the matter. This issue is recognised in the Programme for Government’s extensive cross-Departmental insurance reform agenda, which amongst other things seeks to address consumer and business concerns on the cost and availability of insurance by building on the work of the Cost of Insurance Working Group.
Furthermore, the Government has made available multiple supports to businesses as part of the July Jobs Stimulus and I would encourage the Deputy to direct his constituents to the relevant Government website: https://www.gov.ie/en/campaigns/5654a-july-jobs-stimulus/.
