I am in full understanding of the concerns expressed about how the insurance industry is responding to the needs of its business policyholders in these difficult times, including honouring business interruption claims. While, this is an issue that Minister of State Fleming and I continue to follow closely, it should be noted that neither we, nor the Central Bank can direct or require that insurers cover claims, including those resulting from infectious diseases such as COVID-19, nor can we adjudicate on the validity of such claims.
The above said, I have had a number of engagements with the insurance industry on this issue, and I have made it very clear that as a general rule insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage. They should engage with those impacted businesses honestly, fairly and professionally to honour those elements of the policies covered, in line with the Central Bank’s Consumer Protection Code. I have also indicated to the insurance industry that adopting a “blanket” rejection of all business interruption claims, is doing the industry significant reputational damage and is not treating customers fairly. Most recently when Minister of State Fleming and I met with Insurance Ireland to discuss the Programme for Government’s insurance reform agenda, the need for an appropriate response from insurers was once again stressed.
My officials and the Central Bank have been closely monitoring the UK Financial Conduct Authority’s (FCA) test case, and the Central Bank has engaged with the FCA on the issue. I note the result of the test case, and that a number of the participating UK insurers operate in the Irish market. In that context, I have stated previously that I would hope that those UK insurers operating here would apply any favourable findings, where applicable, from a policyholder perspective, to their Irish policyholders. My Department will continue to engage with the Central Bank on this and other matters in relation to the insurance industry’s response to the COVID-19 pandemic. ALso of note is that the appropriate channels for resolving disputes must continue to be followed by policyholders, i.e. use of the Financial Services and Pensions Ombudsman (FSPO) or litigation.
In terms of the steps that the Central Bank is taking, the COVID-19 Business Interruption Supervisory Framework sets out the Central Bank’s expectations of insurance firms in handling related insurance claims. The objective of the Framework is to seek early identification and resolution of issues which have the potential to cause customer harm, bringing clarity to affected businesses as quickly as possible. Significantly, in my view, where cover and related issues are disputed, the Bank expects firms to pay the reasonable costs of customer plaintiffs in agreed test case litigation.
The Central Bank has informed me that it is currently pursuing a multi-pronged approach to this issue which it believes is the most effective way forward in terms of producing clarity for affected businesses in Ireland in circumstances where there are a variety of insurers, policy types and approaches to dealing with their customers. The Bank has stated that it will leave all possible options open as it takes this work forward. In the meantime, it states that it will continue its robust supervisory engagement with firms in line with the requirements set out in the Framework, which I welcome.
In conclusion, the Deputy should be assured that officials will continue to monitor the business interruption issue and engage as needs be with the Central Bank on the matter and advise Minister of State Fleming and myself as appropriate.