Central Bank expects ‘speedy’ resolution of business interruption claims
The Central Bank has contacted a number of insurers on resolving relevant business interruption claims in a ‘proactive and speedy’ manner.
It comes as the bank continues its supervisory examination of business interruption insurance issues and in the wake of the recent judgement from the High Court against FBD.
The court ruled in favour of four publicans who challenged the insurer on its refusal to pay out on its policy for the disruption their businesses suffered due to the Covid-19 pandemic.
As part of the examination, which the regulator commenced last year, the Bank said it expected firms to ensure fair treatment of customers by, among other things, honouring valid claims and paying them promptly.
In a situation where legal action results in an outcome that has a beneficial impact for similar customers, the regulator reminded firms that they are required to take swift action to ensure those customers benefit from the final outcome.
And it said insurers must make interim payments to policyholders who make or have made claims pending the final determination of the sums due.
“We have made our expectations abundantly clear and we now expect firms, where they have not already done so, to take a proactive and swift approach in their communications with customers and resolution of valid claims,” Derville Rowland, Director General of Financial Conduct with the Central Bank said.
“While there are further decisions before the courts in relation to the quantum of payments, we do not see any reason for any firm to delay matters any further for customers in advance of those hearings.”
The Central Bank examined 250 policy types across more than 30 firms as part of its examination.
It said it was satisfied with the wording of 200 policies and that they were in line the regulator’s judgement and expectations.
There were 50 policy types where the regulator determined that the insurer was not operating in line with the terms of engagement.
Upon challenging those firms, some accepted the Central Bank view and paid out, but others did not.
“We expect firms to operate in accordance with our views and we won’t accept anything less than full application of the benefit to customers for valid claims,” a source at the bank said.
Sinn Féin had called on the Central Bank to follow the example of the UK Financial Conduct Authority, which gathered a sample of different types of insurance policy from businesses and took a court case.
It’s understood that the option of taking such a test case does not exist in Irish legislation.
“The FCA have a very specific power to take test case legislation for contracts that they’re not privy to and bring them before the court and get a declaration from the court on ambiguity,” a Central Bank source said.
“It isn’t a possibility that we had. If we had such a power, we would have looked at it.”
Sinn Féin’s Finance spokesperson Pearse Doherty welcomed today’s update from the Central Bank.
He called on the regulator to communicate its findings to policyholders immediately while stepping up enforcement against insurers.
“While we are aware that some insurers have re-engaged with some of their customers and are making settlements, others are not.
“I am calling on the Central Bank to use all of the extensive powers at its disposal to bring this to a satisfactory conclusion,” he said.
Article Source – Central Bank expects ‘speedy’ resolution of business interruption claims – RTE – Brian Finn