Dáil debates

Wednesday, 29 July 2020

Saincheisteanna Tráthúla - Topical Issue Debate

Insurance Industry

10:10 pm

Photo of Alan DillonAlan Dillon (Mayo, Fine Gael)
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I raise a Topical Issue matter relating to the difficulties facing insurance policyholders with regard to claims arising from business interruption. I can speak of two serious cases that have been brought to my attention by local retailers in recent weeks - and I am sure there are many more nationally - in which claims under business interruption cover were refused despite very clear wording in the policy documents.

Our way of life changed earlier this year with the onset of Covid-19 but the Irish public and our entrepreneurs held firm and rose to the challenge. We witnessed Ireland's community spirit come to the fore. There is an old tradition of the meitheal in Mayo. This is a fondly cherished rural tradition of neighbours coming together to save hay, cut turf and help others in times of need. I speak of the meitheal tradition because the community knows that, in the long run, everyone benefits from working together. It would be wise for insurers engaging in delay tactics when dealing with business interruption claims to think on the issues long and hard as things may go against them.

Uncertainty and fear lay ahead when the integrity of our businesses was challenged. Naturally, small business owners up and down the country checked their insurance policies to see what was indemnified under business interruption cover and what exclusion clauses applied. Many breathed a sigh of relief on reading phrases in their policies which included very clear language about infectious diseases. It looked like the insurers would be there for them. There were phrases suggesting that, in the case of closure, businesses would be covered against loss of profits.

I am sorry, Ceann Comhairle. I have a headache. I apologise.

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Not to worry. I think the Deputy's points are understood. I call on the Minister of State, Deputy Fleming. I believe this is the first chance we have had to engage with him since his appointment. I heartily congratulate him and wish him success in the role he has taken on.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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Go raibh míle maith agat, a Cheann Comhairle. I thank Deputy Dillon for raising this matter. In his contribution, he outlined the importance of the issue of insurance cover during the Covid-19 pandemic and the difficulties people are experiencing with many of the insurance companies upon which we have relied over many decades. This is an issue which is cropping up all over Ireland. He has highlighted some particular issues with regard to the retail sector. What he has said about towns in Mayo is reflected across every town, village and city in the country.

I am aware that there have been many concerns expressed about how the insurance industry is responding to the needs of its policyholders in these difficult times, including with regard to honouring business interruption claims. The Government has been fully engaged with the sector on insurance matters since taking up office and will continue to be so engaged. However, I have to be straight, fair and upfront; what the Government can do and what it cannot do is clear. Neither the Minister for Finance, myself as Minister of State with responsibility for insurance nor the Central Bank can direct or require that insurers cover particular claims, including those resulting from infectious diseases such as Covid-19. Furthermore, it is not a matter for the Government or Central Bank to adjudicate on the validity of such individual claims.

Having said that, whether a business can make a claim in respect of loss of earnings because of closure due to Covid-19 depends on the specifics of its policy.

I understand that many businesses do not routinely have infectious diseases covered as part of their policies. In addition, many of those with such cover only cater for a schedule of listed diseases, and if such diseases manifest themselves on or in the proximity of the insured premises. Even in the case where infectious diseases such as Covid-19 are covered, there may be other considerations that will influence the decision of an insurer to pay a claim or not. It is important therefore for businesses to engage directly with the insurance broker on this matter.

Where a business believes that an insurer has incorrectly rejected a claim, it should either consider referring the matter to the Financial Services Ombudsman, FSPO, for adjudication or, where the claim is in excess of the FSPO €3 million limit, it may wish to consider legal action. We know many small businesses would find that very difficult but I understand that this is already happening in a number of cases.

Notwithstanding what I said at the outset, the Government has engaged with the sector and we have made it clear that insurers should not attempt to reject business interruption claims on the basis of interpreting policies to their own advantage. The Minister for Finance, Deputy Donohoe, following on from correspondence with Insurance Ireland in March, held a teleconference with it on 17 April where he reiterated that some insurers, by adopting a blanket rejection of all business interruption claims, were doing the industry significant reputational damage and were not treating customers fairly.

It should be noted that the Central Bank has also been directly engaging with insurers on business interruption claims and as a first step, wrote to the CEOs of all the major insurance companies in Ireland. The Department of Finance has kept in touch with the Central Bank on this matter and in a call last week, it indicated that it is doing everything within its power to ensure that insurers comply with their legal obligations in relation to business interruption. In this regard, it is undertaking a programme of supervision and engagement with the larger insurance firms to ascertain their approach to dealing with specific elements of Covid-19, including business interruption claims. The Central Bank has indicated that this is a very significant role for it.

The Deputy should also note that the Minister, Deputy Donohoe, and I met earlier today with Insurance Ireland to discuss a range of insurance issues, and business interruption formed a significant part of the discussions.

10:20 pm

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I thank the Minister of State. Does Deputy Dillon wish to comment further or does he want to engage privately with the Minister?

Photo of Alan DillonAlan Dillon (Mayo, Fine Gael)
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I will continue. I thank the Minister for providing an update tonight for the business owners who genuinely feel let down by insurance products that they thought they could rely on. In any case, it remains the case that retailers continue to be distracted by something they feel should be straightforward and takes away from them getting their business operating to the best of their abilities in the new normal. They have adapted to the challenges. However, it is unfortunate that some of the responses I have seen to date from insurers of business owners make much less sense than the wording itself.

I know the Central Bank of Ireland is actively supervising insurance companies and the responses arising from Covid-19. It seems that there are cases where the ambiguity is not favourable to the customer and those cases still need to be answered. In addition, I would appreciate if the Minister of State could outline what engagement the Department has had with insurance companies since the outbreak of Covid-19 and if there has been any specific dialogue on business interruption cover.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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I thank Deputy Dillon for coming back with a specific question about the action that has been taken. The programme for Government has highlighted this issue as a key matter to be dealt with by the incoming Government. Already, there has been a meeting involving four senior Cabinet Ministers and the Minister of State, Deputy Troy, and I with representatives of small businesses. We met face to face with Insurance Ireland today, which is the representative body of the insurance companies and we agreed that there will be a meeting in September with it and several Cabinet Ministers to discuss this issue.

There is a case ongoing with the Financial Conduct Authority in the UK on this exact point. We believe that due to the similarity in our legal systems and insurance policies this could have a significant impact when the matter is decided in the UK courts.

The Central Bank does have a role and it is examining the issue at the moment. From the outset, we considered this primarily as a business issue that needs to be dealt with based on a straightforward business approach. If people believe they had a proper policy, which specifically listed various diseases, this should be interpreted as broadly as possible.

Furthermore, I know it may be difficult for some businesses seeking to reopen when they have this hanging over them but I ask the Deputy to highlight to the businesses in his constituency that the Government has made a number of other supports available to the small businesses to which he referred in the July jobs stimulus. I ask the Deputy to engage with his constituents directly on the 50 other avenues that form part of the July stimulus which may help the businesses he is concerned about to get firmly back on their feet as quickly as possible, notwithstanding the fact that the insurance issue is an ongoing one that is not fully resolved to our satisfaction to date. I will keep in touch with the Deputy on this matter.