Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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96. To ask the Minister for Finance the steps he is taking to reprimand insurers that are not supporting or honouring policies with publicans during this difficult time for businesses due to Covid-19. [17461/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am aware that there have been many concerns expressed about how the insurance industry is responding to the needs of its business policyholders including publicans in these difficult times. I have considerable sympathy for such policyholders. However, it is important to emphasise that neither I, nor the Central Bank can direct or require that insurers cover 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 claims. 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. I understand that this is already happening in a number of cases.

Whilst I have no legal authority to compel an insurer to pay a claim, I believe that as a general rule insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage. I believe that they should engage with those businesses honestly, fairly and professionally to honour those elements of the policies covered, in line with the Central Bank’s Consumer Protection Code. I have outlined these views to the insurance industry on a number of occasions, such as on my letter to Insurance Ireland on the 27 March and indicated amongst other things that

(i) insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage; and,

(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 3 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 this correspondence, I held a teleconference with Insurance Ireland, on 17 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 customers fairly.

In addition, my officials and I have had extensive engagement with the insurance industry regarding insurers offering supports and reliefs to businesses during the COVID-19 emergency. The outcome of this engagement is an agreement that I announced on 10 April whereby most of the key insurers in the Irish market - namely Allianz, AIG, AXA, FBD, Liberty Insurance, RSA, Travelers Insurance and Zurich - would ensure that a number of common forbearance measures are available to their business customers. The agreement covered a commitment by insurers to 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. The agreement also has a commitment to maintain cover for unoccupied commercial buildings/ premises not in use due to COVID-19 restriction (for a maximum of 90 days). I believe that this agreement was a positive step, but it was also critical that insurers delivered upon their commitments. Therefore, I asked Insurance Ireland to put in place a mechanism which provides proof of delivery. My Department received the second “Activity Report” on this issue from Insurance Ireland on 17 July. This Report shows that in the period from 23 March to 15 June, Insurance Ireland members processed 9,789 forbearance requests for business customers worth a total of €9,601,331.

The Deputy should also 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. This included the Bank’s belief that 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 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.

It is also worth noting that I have also held two meetings with the Alliance of Insurance Reform, the latest meeting which took place on 17 June. These meetings were very useful as I was able to hear first-hand the issues faced by businesses in relation to insurance. A further meeting with the Alliance is being held today.

Finally, I wish to state that Minister Fleming and I along with my Cabinet colleagues are prioritising reform of the insurance sector. This is recognised in the Programme for Government’s extensive cross-Departmental insurance reform agenda, which amongst other things seeks to address consumer and business concerns on the cost and availability of insurance by building on the work of the Cost of Insurance Working Group.