Wednesday, 20 May 2020
Department of Finance
54. To ask the Minister for Finance if further engagement has been or is planned to be taken with the insurance industry regarding insurance cover for businesses required to close during the Covid-19 emergency; and if he will make a statement on the matter. [5922/20]
I propose to take Questions Nos. 54, 55 and 134 together.
I am aware that there have been many concerns expressed about how the insurance industry is responding to the needs of its business policyholders in these difficult times, in terms of honouring business interruption claims and also with regard to whether forbearance and other flexible measures are being offered to them. In this regard, I held a teleconference meeting with a representative from the Alliance for Insurance Reform on 1 April to hear the concerns of their membership.
I, and my officials, have been engaging with the insurance sector in an effort to get some much needed certainty for business policyholders. On business interruption claims, I wrote to Insurance Ireland on the 27th of March and indicated amongst other things the following:
(i) insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage.
(ii) that where a claim can be made because a business has closed, as a result of a Government direction due to contagious or infectious disease, that the recent Government advice to close a business in the context of COVID-19 should be treated as a direction.
Insurance Ireland, on behalf of its membership, responded on the 3rd of April and stated that it accepted both of my points. It did however indicate that each insurance policy is different and there may well be other factors which lead to the adjudication of whether a business interruption claim is valid or not, other than Government advice to close.
Following on from my correspondence, I held a teleconference with Insurance Ireland, on the 17th of April, where I 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 their customers fairly. I also discussed a range of other insurance related matters on the teleconference, including motor insurance premium refunds, and a statement outlining the nature of my engagement with Insurance Ireland was issued by the Department and can be found here:
In addition, the Deputies should note that the Central Bank wrote to the CEOs of major insurers outlining its expectations of them in this crisis from a consumer protection perspective. The key messages that the Bank conveyed are as follows:
- Insurers must put forward consumer-focussed solutions on policy payment breaks, rebates and claims.
- While most insurance policies are clear, if there is a doubt about the meaning of a term, the interpretation most favourable to the consumer should prevail.
- The Central Bank expects the CEOs of Irish authorised firms to take responsibility for the oversight of how their firm is managing determinations of whether claims are covered or not in the context of COVID-19.
I also understand that the Central Bank is continuing to engage with the non-life insurance industry on these matters and will continue to closely monitor the situation to ensure that firms are meeting the expectations as previously set out.
In conclusion on this issue, I have already set out to the House that I strongly believe that insurers should treat their customers honestly, fairly and professionally and honour those elements of the policies covered including business interruption claims in line with the Central Bank’s Consumer Protection Code. The Deputies should note however that neither I, as Minister for Finance, nor the Central Bank have any role in adjudicating on such matters. If there continues to be a disagreement between an insurer and a policyholder, then the appropriate channels for resolving them must be followed i.e. use of the Financial Services and Pensions Ombudsman or litigation.
With regard to the other issue raised on insurance cover for businesses required to close during the Covid-19 emergency, I and my officials have also had extensive engagements with the industry. In that regard, it should be noted that in my letter of the 27th of March, I also requested that Insurance Ireland press its members to provide some reliefs to their customers to alleviate the pressures brought on as a result of the current situation and for insurers to have a common approach on how they are supporting their business customers in this difficult time. The outcome of this engagement is an agreement that I announced on the 10th of April whereby most of the key insurers in the Irish market - namely Allianz, AIG, AXA, FBD, Liberty Insurance, RSA, Travelers Insurance and Zurich - will apply the following common measures which will be available to their business customers:
- Insurers will reduce premiums for business customers to reflect reduced level of exposure as a result of COVID-19 restrictions for Employer Liability/ Public Liability and Commercial Motor.
- Insurers will allow up to 28 days after renewal for payment.
- Insurers will maintain cover for unoccupied commercial buildings/ premises not in use due to COVID-19 restriction (for a maximum of 90 days). Appropriate supervision and security of the premises is required.
- Insurers will support requests for a change of property use during the crisis.
It is important that businesses contact their insurers or brokers to avail of these offers.
In terms of this agreement, I believe that it should provide some assistance to businesses. I have asked Insurance Ireland to put in place a mechanism, which will provide proof of delivery on these commitments. My view, is that it is in Insurance Ireland’s interest to put in place a credible tracking mechanism, as they need to be able to demonstrate that the 10 April agreement is being implemented properly. I have also asked my officials intend to monitor the implementation of the agreement, both through the activity tracker, as well as through the regular engagement with other relevant stakeholders such as the Alliance for Insurance Reform.
Finally, with regard to any further engagement with the insurance industry, it should be noted that my officials are in regular contact with Insurance Ireland and the Central Bank and keep me updated on developments. For now, while I don't have any meeting arranged with individual insurance company CEOs, I am keeping that issue under review as matters develop.