FBD pays €6m for Covid claims ahead of compensation rate ruling
FBD’s CEO has told the Irish Independent the firm has not lost business as a result of refusing to pay out on business interruption claims until ordered to by the courts.
Commercial renewals were up 2.8pc in the last year.
The insurer has paid out €6m so far to customers in interim payments after losing a court case on the claims. FBD said it has capacity to process claims as they come in.
In financial results for 2020, FBD put the gross cost of business interruption claims by around 1100 pubs at €150m, after it lost four test cases brought by pubs who said their policies provided cover for lost business. The bill includes insurance payouts, legal and other expenses.
FBD’s CEO Tomás O’Midheach said the true cost will not be known until lockdowns are over – because some businesses are still covered for ongoing business loss and the High Court has yet to rule on how much FBD must pay out per claim.
The High Court yesterday said it hopes to fix a hearing date in April to quantify how much FBD must pay out on business disruption claims, after finding that the publicans’ losses were covered in principal.
In the meantime, 350 of the 1,100 customers covered by the policies have sought and received interim payments, pending the final decision on the quantum of compensation, FBD said.
Talks with FBD’s underwriters to see how much of the company’s final bill will be covered by its own insurers have begun but are expected to take some time.
Former AIB executive Mr O’Midheach only took over as CEO of FBD earlier this year, at the end of the dispute over business interruption cover.
He defended the insurer’s stance, saying the decision to reject claims from publicans for lost income was based on advice the company received from senior counsel.
FBD accepted its liability once it had clarity from the courts, he said.
While there was “undoubtedly a hit” in terms of FBD’s brand, he said commercial renewal rates last year were positive, up 2.8pc – even the pub sector at the centre of the controversy showed strong renewals. FBD reported profit before tax of €4.8m for 2020.
Mr O’Midheach said he did not expect the firm to pay a shareholder dividend in 2021 given the continued uncertainty in the market.