FBD’s image will suffer from its treatment of SMEs in pandemic

Business Comment: Insurer has a lot of making up to do to restore its reputation among some SMEs

An FBD insurance branch office in Dublin. Photograph: iStock

For a company on the sharp end of a series of court judgments over its liability for pandemic-related business interruption (BI) cover, the insurance group FBD was remarkably bullish on Friday after the High Court ruled it must cover losses in a test case of four pubs.

However, FBD may find that the longer-term impact of the case on its public and governmental relations is not so benign.

A judge on Friday ruled that it must make payouts to Sean’s Bar in Athlone, as well as the Lemon & Duke, the Leopardstown Inn and Sinnott’s in Dublin over anti-virus restrictions in place since last year, enforced during periods when the pubs were partially open. It covered restrictions such as the closure of bar counters and reduced trading hours. The issues clarified will be applied to an estimated 1,000 pub policies.

This follows on from a judgment last February in which FBD was ordered to pay BI compensation to pubs for periods of full closure. Again, FBD fought that case tooth and nail against a handful of tenacious small pub owners.


Last Year, FBD signalled the total related BI cost could be €183 million, with reinsurers expected to pick up about €116 million – FBD made a provision of €67 million. Yet on Friday after its latest court reversal, it issued an upbeat statement suggesting profits will be higher than expected because, it seems in part, reinsurers may pick up a bigger part of the tab, allowing it release some of its provision. Analysts now expect profits of about €100 million, double what had been previously predicted. Happy days for FBD’s investors, it seems.

Yet the company’s reputation in the corridors of power, as well the public eye, will suffer in the longer term for being seen to treat SMEs harshly during the pandemic, a time of national crisis. Good relations with State powerbrokers matters in a highly-regulated industry. Damaging such relations can run contrary to an industry’s interests for years to come: just ask bankers.

FBD has a lot of making up to do to restore its image among some SMEs in the hospitality sector.