An insurance company has persuaded the High Court to upend an ombudsman’s findings relating to business interruption claims from businesses that provided “essential services” during the pandemic.
Although the Financial Services and Pensions Ombudsman had dismissed a ship repair firm’s insurance claim, insurer Chubb European Group SE appealed to the court seeking the overturning of certain adverse findings.
It argued the ombudsman’s decision could trigger certain obligations under the Central Bank’s supervisory framework for Covid-19 and business interruption insurance.
Mr Justice Garrett Simons found the ombudsman’s ruling was tainted by “serious and significant” errors, warranting it being struck down.
The ombudsman’s decision came in response to a complaint from Rappel Enterprises, trading as Arklow Marine Services, claiming Chubb had wrongfully declined to pay out on its claim for business interruption during the pandemic.
The claim turned largely on whether Arklow Marine Services was exempt from restrictions on the basis that it was providing an “essential service” within the meaning of the 1947 Health Act, the judge said.
The Wicklow company closed on March 26th, 2020, following a Government announcement of additional measures designed to curb the spread of Covid-19. It told the ombudsman that its business comes from across Ireland and Britain so permitting customers on its premises would have created a risk.
The ombudsman accepted Chubb’s submission that the ship repair firm was providing an essential service and was entitled to remain open.
While the ombudsman held that Arklow Marine Services failed to discharge the evidential burden required to claim under the policy, the High Court found he went on to determine the company was entitled, in principle, to recover under its policy if it could show it was likely Covid-19 would occur at its premises.
Mr Justice Simons noted Chubb claimed more than 500 Irish businesses were insured under this particular policy, while a further 1,500 firms in Ireland and Britain have been insured using wording that is essentially the same.
A published decision of the ombudsman that reaches conclusions on the interpretation of a particular form of policy wording will, at the very least, represent a “persuasive precedent” for other complaints based on similarly worded policies, he said.
It also has the potential to trigger obligations under the Central Bank’s supervisory framework for business interruption insurance, the judge added.
Mr Justice Simons held that the ombudsman’s decision contained “serious and significant errors”.
The ombudsman purported to make findings on the interpretation of the insurance contract without applying the proper principles of contractual interpretation, said the judge.
Further, these findings were reached in breach of fair procedures as the ombudsman did not properly engage with various submissions made by the insurer, he said.
It is not appropriate for the court to determine the contractual interpretation questions afresh, the judge said.
He said he would set aside the ombudsman’s decision and will give the parties an opportunity to address him on the final form of order.