Minister for Finance to meet insurance sector today

Minister for Finance to meet insurance sector today

The Minister for Finance will hold a virtual meeting with executives from Insurance Ireland this afternoon to work through concerns that the industry is relying on fine print and technicalities to avoid business interruption payouts caused by the Covid-19 lockdown. 

The Central Bank has ordered insurers that it regulates to submit detailed breakdowns of their business interruption policies by end April including data with ambiguous language and how these are being addressed.

The Irish Times notes that around 150,000 businesses in Ireland have some form of insurance policy, with around half of these paying for business interruption cover. Roughly half of the business interruption contracts – some 37,500 businesses – are said to mention notifiable diseases. Policies are written in a way that there’s a territorial limit or to exclude specific diseases. 

Most also have monetary limits, with a claims agent in the article suggesting a c.€20k limit on average, but some that go up to €50k. The article also references a letter seen by the Irish Times sent to a claimant by FBD in relation to a business interruption claim.

The article suggests that the Central Bank has made it clear to insurers that it is looking at the industry not only through the prism of the Central Bank Consumer Protection Code but also the EU Unfair Terms in Consumer Contracts Regulations 1995, suggesting that the risk for the sector is that it finds itself caught up in a Central Bank examination similar to the tracker mortgage problem for the banks, according to industry and regulatory sources.

According to Goodbody Stockbrokers, "The case of the insurance industry in general was probably helped by the letter from the PRA in the UK to CEOs of UK insurers that “based on our conversations with the industry to date, our estimate is that most policies have basic cover, do not cover pandemics and therefore would have no obligation to pay out in relation to the Covid-19 pandemic”. So, the regulator taking a clear view in the UK and a large number of UK owned insurers operate in the Irish market."

They added, "However, the Central Bank and Minister for Finance here look set to keep-up the pressure up on the industry in Ireland, so it looks like this issue is going to run for some time, probably with little clarity, but with risks lingering for the insurance industry."

Source: www.businessworld.ie