Business interruption claims dominate Ombudsman report

The row over insurers' failure to pay out on business interruption cover dominates the latest set of rulings announced by the Financial Services Ombudsman.

The digest of decisions – the sixth published by the ombudsman’s office – gives summaries of 21 decisions issued during 2020 and 2021, of which 12 relate to the investigation of complaints relating to business interruption insurance.

"To date, we have received 1,051 complaints arising from the circumstances surrounding the Covid-19 pandemic," the ombudsman, Ger Deering, said. Of these, 180 of which related to business interruption insurance.

“During 2020, we put specific measures in place to ensure the efficient management of Covid-19 related complaints. These measures included the prioritisation of complaints concerning business interruption insurance, in recognition of the importance to policyholders of achieving a swift understanding as to whether they were entitled to benefits or payments from their insurer.

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Covid-19 cases

He said his office had so far concluded 760 of the Covid-19 related cases brought to his attention, “including 113 of the 180 business interruption insurance complaints we received”.

He acknowledged that many businesses bringing complaints to his office over business interruption faced exceptional difficulties.

“The decisions contained in this digest highlight the crucial importance of understanding the extent of the cover provided by an insurance policy and any conditions or limitations to that cover,” he said.

“The decisions highlight that, in some complaints, I found that the specific wording of the policy did provide indemnity for such circumstances, while in other complaints there was clearly no indemnity available under the complainants’ policies of insurance.”

Decisions

Among the decisions published – all of which are anonymised – one insurer was ordered to pay a publican €20,000 in compensation alongside an advance insurance payout of €28,500 over its refusal to honour a business interruption policy.

The ombudsman said the compensation payment “recognised that the publican had suffered great inconvenience as a result of the insurer refusing the claim for almost a year”.

A separate business interruption case saw a printing shop secure a €12,000 advance payout and €4,000 in compensation over a similar policy.

He also ordered compensation of €750 be paid to a bakery even though this particular business interruption policy did not provide cover for the Covid-19 shutdown. The Ombudsman said he partially upheld the complaint on the basis that the insurer had not properly assessed the claim for loss of stock.

However, he also found against the complainant in several cases – including those involving a dentist, a physiotherapist and a solicitor – because the policy wording required there to have been a Covid-19 case found on the premises.

Mr Deering said he had upheld business interruption complaints against three insurers, some of which would have implications for other policyholders. Two of the insurers had since said they were willing to apply his rulings to policyholders with similar circumstances.

One insurer has appealed a business interruption decision to the High Court. The ombudsman said that, while he will continue to investigate complaints against that insurer, he would not issue preliminary or final decisions on those complaints until the High Court rules on the issue.

Personal injury

Other findings included a €20,000 compensation payment to a business owner over a declined personal injury claim on their insurance. The insurer refused the claim on the basis that CCTV had to be retained but, in his decision, the ombudsman found the wording of the policy did not expressly require the maintenance of a CCTV system to record or retention of footage.

The ombudsman also directed the insurer to pay all reasonable legal expenses already incurred by the complainant.

He also ruled against banks in two separate cases where accounts had been moved to “problem debt” or “non-performing loan” departments within the banks even though both accounts were in good standing.

While he found the banks had policy on aggregating accounts, which would explain the decisions, he noted that they had not informed customers of such policies. Compensation of €3,000 and €15,000 were ordered in the two cases.

“Entering into an insurance contract or a banking relationship is an important decision that can have profound impacts. It is important for those entering into such arrangements to know their needs and to ensure that the contracts they enter into meet those particular needs,” Mr Deering said.

This digest of decisions focuses on complaints made to the ombudsman by businesses. The office is also available to individual consumer complainants. The ombudsman’s rulings are legally binding.

Companies looking to bring a case to the Financial Services and Pensions Ombudsman must have turnover of less than €3 million a year.

The ombudsman said that, given the increase in the number of decisions being issued and the increased interest in those decisions, he intends to publish them on a monthly basis in the future.