Business interruption claims could now hit €183m, says FBD

Led by Tomás Ó’Midheach, the insurer made a profit of €22m in first half of year

Insurer FBD said on Friday it estimated that gross claims and expenses arising from a landmark Covid-19 business interruption pubs test case in February would rise to €183 million, up from a previous figure of €150 million.

The State’s only indigenous insurance company has set aside €67 million of provisions, mostly booked last year, to cover its best estimate for net costs relating to public house claims, with the expectation that its own reinsurers will pick up most of the tab.

The company highlighted in financial results for the first half of 2021, published on Friday, that it has also set aside a €13.4 million provision during the period to cover compensation to customers where FBD initially refused to accept liability for public house business interruption claims last year.

This was on foot of recent decisions by the Financial Services and Pensions Ombudsman in relation to this issue, which had a wider bearing than the individual complaints with which the ombudsman dealt.

FBD, led since January by chief executive Tomás Ó’Midheach, swung to a profit of €22 million for the first half of this year from a €9 million loss for the same period in 2020. Gross writing premiums rose to €183.4 million from €176.2 million.

Having abandoned a plan to pay a €35 million dividend last year on 2019 profits, amid uncertainty caused by the pandemic, FBD said on Friday that it was continuing to hold off on making shareholder payments as its board “continues to believe that capital preservation is paramount”.

While the High Court heard a so-called quantum hearing in July on the public house cases, a ruling on the matter is not expected until December.

“Once the judgment is delivered, we will make claims settlements as expediently as possible, with interim settlements of €20 million already paid,” it said. “The best estimate gross claims cost increased by €33 million to approximately €183 million primarily due to higher expected legal costs and a reassessment of the estimated amounts that will be paid to customers based on the latest available information including reopening dates of public houses.”

The December judgment would allow FBD to finalise how much it can recover from reinsurers, it said.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times