Coronavirus: Insurers told to interpret claims in customers’ favour

The Central Bank has told insurance chief executives in the State they must take personal responsibility for the oversight of how claims relating to Covid-19 are handled by their firms, and to interpret policies in favour of customers where there is doubt.

“Although the Central Bank expects that most policy wordings are clear in terms of what cover is provided and what cover exclusions are in place, where there is a doubt about the meaning of a term, the interpretation most favourable to their customer should prevail,” the Central Bank said in a letter to the firms on Friday, ahead of the CEOs’ meeting with top regulators on Monday.

"Firms must ensure that claims are appropriately assessed and, where there is insurance cover in place, that claims are accepted and paid promptly," said the letter, signed by the Central Bank's director-general of financial conduct Derville Rowland and deputy governor Ed Sibley.

Companies with business interruption cover are being told they are not eligible for compensation because they were not legally forced to close by the Government or because an employee had not contracted the virus on their premises, according to business bodies.

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Guidelines and direction

Both the Department of Finance and Central Bank have stated that Government guidelines and direction amount to the same thing in this instance.

Meanwhile, small- to medium-sized enterprises (SMEs) with infectious disease cover are being told a pandemic is not included, or that Covid-19, a new virus which only emerged in humans in the Chinese city of Wuhan late last year, was not listed as an infectious disease.

The Central Bank expects the insurance industry to protect its customers during this extraordinary time

Business and insurance industry sources have said that, in the vast majority of cases, it is clear that losses arising from the coronavirus crisis are not covered by businesses’ policies. However, there are some that are covered and other cases where language in policies is ambiguous, they said.

AXA Insurance Ireland said on Friday it will accept Covid-19 business interruption claims from more than 4,000 business clients in the Republic, typically covering shops and offices where the virus does meet the description of a “disease” as set out in the relevant policies.

Big players

FBD Holdings, Allianz Ireland and AIG are other big players in the business interruption market.

The Central Bank is also looking at insurers’ handling of claims relating to travel, health and mortgage protection policies.

“The national measures introduced to combat the Covid -19 virus have been introduced in the public interest and the Central Bank expects that the insurance industry will play its part in protecting its customers during this extraordinary time, to be sensitive to the difficult situation in which many find themselves, and to take steps to support them,” the Central Bank letter said.

“The challenges posed are unprecedented and will require a swift yet carefully considered approach to achieve the right outcome for customers.”