Minister of State Fleming notes Court Judgment of Business Interruption Test Cases

The Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming TD, today (28 January) noted the judgment of the High Court in a number of test cases relating to business interruption insurance claims arising from COVID-19-related disruption.

Commenting on the judgment, Minister of State Fleming stated:

“As with the initial judgment last February, the findings are substantial and will take some time for all parties to consider. However, I note that the Court has asked the parties to make every effort to resolve outstanding issues between themselves. This approach is to be encouraged, and where a contractual liability exists, the Government expects that such claims are settled promptly.

The Government’s consistent view has been insurers should engage with impacted businesses honestly, fairly and professionally to honour the terms of the policy cover, in line with the Central Bank’s Consumer Protection Code. Separately, the Central Bank’s Business Interruption Insurance Supervisory Framework sets out its expectations of insurance firms in handling COVID-19 related business interruption insurance claims.”

The Court did not issue a judgment today in relation to the issue of the deduction of State supports from successful business interruption claims; however, it may do so at a later date. The case has been listed again for mention on 17 February.

Background note:

Working to protect customers during and after the COVID-19 crisis, with particular emphasis on business disruption insurance, is a priority issue for the Government. This is reflected in the Programme for Government and the Action Plan for Insurance Reform (Actions 8-10).
In August 2020, the Central Bank published its Business Interruption Insurance Supervisory Framework, which sets out the Central Bank’s expectations of insurance firms in handling COVID-19 related business interruption insurance claims.
The judgment(s) handed down today by the Commercial Court (a division of the High Court) relate(s) to agreed test cases, and may be subject to appeal by either side.
Whether a business will be able to successfully claim on a business interruption policy due to a COVID-19 enforced closure will depend on the specifics of its policy, which is ultimately a matter of contract law between the business and its insurer. The Government cannot direct or require that insurers cover claims, including those resulting from infectious diseases such as COVID-19, nor can it adjudicate on the validity of such claims.
Where there is a disagreement between an insurer and a policyholder in relation to a claim, then the appropriate channels for resolving it must be followed – i.e. use of the Financial Services and Pensions Ombudsman (FSPO) or litigation.

State Supports and Business Interruption Insurance Claims:

As the case is still ongoing, it would be inappropriate for the Government to comment further, including in relation to the matter of insurers deducting State supports from compensation payments.
These State supports were designed to provide relief to affected businesses as quickly as possible to ensure their continued viability, and in that regard they should be viewed as a success.
These supports should not be seen to be subsiding the insurance industry, nor should industry be seen to be indirectly benefitting from taxpayer money.
The Government’s Insurance (Miscellaneous Provisions) Bill, contains clear and practical provisions to enhance transparency around this practice, and will be prioritised for passage through the Oireachtas in the Spring legislative cycle.
Insurance Ireland has noted that its members have refunded over €56 million in motor rebates to private and commercial customers across Ireland, which is to be welcomed. The Government would encourage insurers to engage further to resolve this particular issue in the spirit of goodwill.
Regarding how this issue was handled in the UK, some insurers there committed not to deduct the value of some general COVID-19-related grants. However, it is understood that some specific COVID-19 supports – including the UK’s Furlough Scheme (similar to Employment Wage Subsidy Scheme here) – are outside this arrangement, and that not all insurers have signed up to this commitment. On its website, the Association of British Insurers (ABI) has also stated that as a general principle, insurers would not expect customers to claim for losses to income that have already been compensated from elsewhere.
This is in line with the principle of established insurance principle of indemnity.