Restaurants turn to CBI on claims
THE Central Bank is coming under pressure to indemnify restaurants — some of which are facing imminent eviction from their premises — in fresh court actions against insurers who are not paying out on business interruption claims.
Solicitors for the Restaurants Association of Ireland (RAI) have written to Central Bank governor Gabriel Makhlouf asking the financial watchdog to take legal action against insurance companies to clarify the interpretation of certain policies.
This follows a High Court ruling earlier this month that four pub owners are entitled to be compensated by FBD Insurance for business disruption as a result of Covid-19 restrictions.
The outcome affects claims made by more than 1,000 pubs and restaurants.
The RAI wrote to 12 insurance companies seeking confirmation of indemnity and business interruption payments on foot of the court judgment — but says only one confirmed it will pay out.
The letter asks the governor to confirm whether it is the CBI’s intention to commence litigation similar to that undertaken by the Financial Conduct Authority in the UK which resulted in a court ruling that benefited hundreds of thousands of business policyholders there.
Solicitor Georgina Robinson, whose firm represents more than 400 RAI members, said the alternative is a series of costly arbitrations.
She said: “One case taken by the Central Bank, similar to the Financial Conduct Authority in the UK, could probably solve all this.
“If the CBI don’t agree to take the case, we will look to join them as a notice party to proceedings and seek indemnification for restaurant owners’ legal costs.”
Fianna Fáil TD Marc MacSharry said publicans, hoteliers and restaurant owners are being “penalised” by being forced into a costly and secretive arbitration process.
He intends to raise the issue with Tánaiste Leo Varadkar and Mr Makhlouf.
The CBI did not respond directly to queries about the RAI’s legal letter, but said it expects insurers to treat their customers fairly.
“We have been clear that where a relevant court outcome has a beneficial impact for similar customers, firms should take urgent action to ensure those customers benefit from the final outcome,” the CBI said.
Insurance industry sources have argued that insurers have been active in engaging with policyholders, but that some simply are not covered for losses as a result of pandemic closures.
RAI chief executive Adrian Cummins accused insurance companies of being engaged in a “war of attrition”, saying: “It is our belief the longer this goes on, the better for the insurance companies because when a business is liquidated, the insurance company doesn’t have to pay out on a Business Interruption Claim.”
Insurance Ireland CEO Moyagh Murdock strongly rejected this.
“It is not in our members’ interests to see their customers going under and, where there is cover, they are engaging with customers and dealing with those claims quickly and effectively,” she said.
“We understand that this is a very difficult time for businesses and that business interruption insurance is a cause of concern in the marketplace.
“It is a very complex issue. No insurance market in the world provides widespread insurance coverage for pandemics and Ireland is no exception.”
‘It is not in our members’ interests to see customers going under’