Central Bank may seek court orders for insurers avoiding valid Covid claims

High Court rules in favour of four publicans who challenged FBD on its refusal to pay out on its pubs policy

Central Bank director general for financial conduct Derville Rowland.

Central Bank director general for financial conduct Derville Rowland.


The Central Bank of Ireland said on Wednesday it has written to a number of insurers pressing them to pay out on valid business interruption claims, following landmark court judgments in the UK and Ireland in favour of companies affected by the economic shock caused by Covid-19.

The UK Supreme Court ruled in January that a number of insurers – including Hiscox, RSA and QBE, which write business in the Republic – were liable to pay out on certain policies after the country’s Financial Conduct Authority (FCA) took a test case.

The High Court in Dublin ruled earlier this month in favour of four publicans who challenged FBD on its refusal to pay out on its pubs policy. This may cost the company up to €60 million as the judgement has ramifications for about 1,100 other pub policy holders, according to analysts. The company’s reinsurers face further costs.


While the Republic does not have the equivalent of the UK’s financial market test case scheme, sources said that the Central Bank may ultimately issue directions or even resort to the courts to secure enforcement orders against insurers who do not pay out on valid claims, including where there is doubt over the meaning of a term.

The Central Bank started an examination of insurance policies last year, after Covid-19 prompted widespread restrictions. It is understood that more than 100,000 policies were found to have some form of business interruption coverage, with almost half of potentially in scope to cover losses caused by the pandemic.

However, some of these were dependent on an outbreak occurring on a premises, while others covered businesses that were able to remain open during the crisis. A spokesman for Central Bank declined to comment on the figures involved.

“Following the extensive identification and review of hundreds of different policy types, a number of insurance firms had already accepted and commenced settling claims prior to the recent court decision,” said Central Bank director general for financial conduct Derville Rowland in a statement.

“We have made our expectations abundantly clear and we now expect firms, where they have not already done so, to take a proactive and swift approach in their communications with customers and resolution of valid claims. While there are further decisions before the courts in relation to the quantum of payments, we do not see any reason for any firm to delay matters any further for customers in advance of those hearings.”


The spokesman also declined to comment on the firms that have accepted liability. French insurer Axa said last April that it would 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 general “notifiable disease” as set out in the relevant policies.

Hiscox is also begun to contact Irish customers saying it is prepared to pay out on certain policies. FBD has said that it will make interim payments to pub customers, even as the issue of the size of payouts on foot of the High Court ruling has not yet been established.

The court heard on Wednesday that FBD is discussing quantum of payouts with the pubs that took the case, though the issue may yet need direction from the court.

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