FBD Insurance has now reached an agreement with reinsurers on how recoveries will operate relating to COVID-19 business interruption (BI) claims from public house customers.
As we wrote last year, the Irish High Court previously ruled that FBD Insurance must compensate four pub owners for the disruption caused to their businesses as a result of the pandemic.
Following the ruling, the Central Bank of Ireland wrote to a number of insurers pressing them to pay out on valid claims.
This morning, the quantum hearing judgement delivered in the High Court has provided clarity on the definition of business closure and on other matters such as allowable wages. FBD notes that although some matters still need to be clarified, it will now continue to progress with the settlement of valid claims for customers.
The insurer says that it has been “in extensive discussions with reinsurers on the application of reinsurance cover to these business interruption claims.”
Following these discussions, the insurer has reached an agreement with reinsurers, for the expected impacted layers of its catastrophe programme, “on how reinsurance recoveries will operate.”
FBD says that this “positive development” lowers the uncertainty surrounding reinsurance recoveries and has had a favourable impact on previously booked reserves net of reinsurance.
“In addition 2021 has yielded strong investment returns through the Income Statement, benign weather and positive current and prior year claims experience,” says the firm.
In light of the above, FBD expects its profits for the 2021 financial year to come in significantly ahead of previous guidance, likely in excess of €100 million pre-tax.
“Furthermore, FBD confirms that Government subsidies paid to public house customers with Business Interruption cover have not and will not contribute to 2021 profits.”
