The insurance industry finds itself standing at a crossroads, littered on the road behind are the remnants of business interruption policies & a host of SME’s in some of the hardest hit sectors of the Covid 19 pandemic who’s businesses may never be the same again.
Hoteliers, restaurants, small establishments for that bijou gig up to concert halls and venues like the 3 Arena sitting idol, staff furloughed or laid off with management and owners left accruing debt for rent, rates and Insurance among a few of the costs now being juggled like expensive balls in the air… albeit still with no end in sight or light at the end of the proverbial tunnel.
As these businesses find themselves on a 2021 repeat level 5 lock down it must feel like Deja vu for one of the hardest hit sectors; the pubs, particularly the ‘wet pubs’ as we now know them basically have written off 2020 & 2021 the insurers and underwriters are doing the industry two step. It reminds me of the Pyrite heave and damage to homes following the Celtic tiger building boom and insurance companies taking the position that liability to home owners with pyrite damage and the volumes of claim payouts was unpalatable. They chose to go to court and argue the definition of “imminent damage” here we are 10 years or so later and off to court again ‘altering the policy script’ the test case for these revisions and reform amendments is FBD and four publicans.
The actions commenced on October 6 in the commercial court have been taken by Dublin bars Aberken, trading as Sinnotts Bar; Hyper Trust Ltd, trading as The Leopardstown Inn and Inn on Hibernian Way Ltd trading as Lemon & Duke and fourth action against FBD was taken by Leinster Overview Concepts Ltd, the owner of Sean’s Bar, which is not far from me in Athlone.
In the interest of accuracy the author has frequented Sean’s bar, So I’ll declare my bias as Sean’s is a good spot in the town for the ‘craic’ and many pints were had with army friends coming and going for duty tours in Lebanon and Bosnia.
On August 1st 2020, FBD updated pub trade insurance policies to reflect the company’s position that Covid and other communicable diseases should not be covered by business interruption insurance. This new policy language is being rolled out across other commercial insurance products and policies on an ongoing basis which brought about the court action of October 6th here in Ireland.
As the Irish case rolls on Mr. Justice Denis McDonald was asked by FBD’s lawyers to delay delivering his judgment to allow submissions to be made on the UK appeal. This appeal was granted to the plaintiff’s who are small businesses, from restaurants to nightclubs and wedding planners to beauty parlors, on Friday 15/01/21 won the right to insurance payouts in the UK after its supreme court ruled their policies should cover losses caused by coronavirus lockdowns. The UK Financial Conduct Authority (FCA) estimates that a combined £1.2 billion could now be paid out.
The British case has been closely followed in Ireland where four publicans have brought cases challenging FBD’s refusal last year to cover losses caused by business interruption as a result of the coronavirus crisis.
The Irish High Court decided this week to defer delivering its judgment on the pubs test cases to allow lawyers make further legal submissions arising from the UK judgment. The ruling, which had been due on Friday, will now be given on February 5th.
Insurance companies are facing profound change from disruption and not just digital. Demanding customers, new competitors and a changing set of challenges are transforming the industry. The consumers expectations are shifting as they apply their experience of shopping around for a good deal particularly online retail – to insurance. Comparison websites simplify what you get for the different policies so keeping customers ( for example the premium returns in the Health insurance and Motor insurance ) looks like fair play, but in reality it’s about customer relations and the savings in the millions; the true figures which will be available in a couple of years from statistic’s and actual reduction in claims in both Health and Motor as we all sit at home and work from home will raise questions on policy separation and how underwriting actually manages funds. I’m not making any unsubstantiated claims (pardon the pun) but just look how they are willing to behave in light of the media and public, would make one think about what decisions go on behind closed doors…?
One thing that is a given, having allies when dealing with insurance companies can only benefit your chances of a successful claim and payout commensurate with your losses. Contact Claims Assist Ireland for advice and loss assessment service for business interruption claims, business property damage claims or home insurance claims like fire, chimney fires, storm and flood damage.
Author Michael Fleming
“FBD shares drop following UK court ruling on Covid insuranceCite; (excerpts from Author: Joe Brennan – Irish times article Fri, Jan 15, 2021
Insurer facing higher payout in business interruption case taken by four publicans”