Insurance hold-out changes course on business interruption
AT least one company holding out on paying business interruption claims has decided to start settling with customers whose businesses were forced to close because of the pandemic.
QBE, an Australian-based global insurance company with operations in Ireland, has written to its commercial insurance clients to inform them that it has reversed course on business interruption claims following the FBD case.
“As a result of the clarity brought by these proceedings, QBE are pleased to confirm that policy cover for your claim is now admitted in principle, even if we have previously indicated that there is no cover available under the notifiable disease extension in your policy,” the letter stated.
The company said it was now working as quickly as possible to validate claims and complete the adjustment process to settle “at the earliest opportunity”.
The development comes just days after the Central Bank threatened to take enforcement action against a handful of insurance firms that were not honouring valid claims on business interruption policies.
The Central Bank insisted after the FBD judgement that all insurance companies must interpret their policy wordings in favour of the customer and take a proactive and swift approach to processing claims for business interruption.
While several firms moved quickly after the FBD case to begin processing claims, a few companies continued to deny that their business interruption policies covered pandemic-related closures.
Some were refusing to pay for reasons outside the scope of the FBD dispute, with at least one claiming that seated food businesses could have remained open during the first lockdown as “essential”, according to correspondence seen by the Irish Independent.
Last Wednesday, the Central Bank wrote to a small number of insurers that were still holding out on payments, telling them to honour valid claims and deliver payouts promptly or face escalating regulatory action.
The Central Bank would not disclose if any of the companies it contacted had changed their position as the matter falls under “supervisory confidentiality obligations”.
FBD is issuing 2020 results on Friday and is expected to raise its guidance for business interruption losses. Goodbody yesterday increased its estimate from €30m to €70m, saying FBD would book a loss for the year and wipe out the dividend for shareholders.