Central Bank urged to address insurers rejecting Covid-19 claims

The Alliance for Insurance Reform has written to Central Bank governor Gabriel Makhlouf urging the bank in its consumer-protection role to address a stand-off between businesses and the insurance industry over claims for loss of earnings as a result of coronavirus.

"Time is of the essence in addressing this issue and in order to get a swift resolution, we request that the Central Bank, in its role as the consumer-protection agency in the insurance market, makes a public statement on its approach to the issue and urgently meets representative bodies of the affected businesses and the main insurers to quickly turn a blanket ban into a sensible resolution of the problem," Peter Boland, director of the representative group for 36 business organisations, said in the letter.

Companies that have 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.

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

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It’s understood that insurance companies have been in direct contact with Central Bank staff in recent days, while the industry has also engaged with Department of Financial officials. However, no meetings have been scheduled with the Central Bank governor or the Minister for Finance.

Standard cover

Insurance Ireland said on Monday that "standard" business interruption cover did not include forced closure by authorities "as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade".

“A small number of businesses may have cover for closure due to an infectious disease, but this will depend on the precise nature of their cover,” it said, adding that paying out on cases that were not covered by contract may lead to solvency issues for insurers, as they would not be able to recoup money under their own risk-sharing deals with big international reinsurers.

Mr Boland has also written to the Financial Services and Pensions Ombudsman (FSPO), Ger Deering, to ask him to meet representative bodies of businesses affected by the Covid-19 pandemic and the main insurers.

Mr Deering said on Monday evening that he had not yet received the communication. However, he said that if his office starts to receive complaints related to Covid-19, parties will be offered the standard opportunity to use the FSPO’s dispute resolution service.

“This is the quickest way to resolve complaints and can result in some complaints being resolved in a number of weeks. We aim to complete the dispute-resolution phase within 12 weeks,” he said.

“This is an informal mediation process through which an independent dispute-resolution officer of the FSPO listens to the consumer and the provider and facilitates a mediated agreement between them that is acceptable to both parties. This dispute-resolution process using mediation provides a flexible and innovative approach to complaint resolution.”