Reinsurance News

Irish High Court rules FBD Insurance must compensate for COVID-19 BI losses

8th February 2021 - Author: Luke Gallin

The Commercial Court in Ireland has ruled that FBD Insurance must compensate four pub owners for the disruption caused to their businesses as a result of the COVID-19 pandemic.

Justice Denis McDonald found that a policy sold by the insurer covered losses the pubs suffered by having to close as a result of the ongoing crisis.

According to reports, the outcome of the landmark ruling affects claims made by more than 1,000 pubs and restaurants in Ireland. However, this ruling concerns actions taken by three bars in Dublin and one in Athlone.

After the initial temporary closure of businesses in mid-March 2020, FBD Insurance refused to payout on the basis that closures were not the result of an outbreak of the coronavirus at the premises or within 25 miles of them, arguing that closures occurred due to a national situation that was not covered.

However, the Commercial Court division of the nation’s High Court ruled that cover was not lost where the closure was caused by nationwide outbreaks of disease, provided there was an outbreak within the 25 mile radius and that the outbreak was one of the causes of closure.

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In response to the ruling, FBD Insurance notes the decision by the Court and “intends to now commence the process of settling claims for the customers involved which will include issuing interim payments in the short-term while awaiting final clarity on quantum.”

Additionally, FBD Insurance has said that it will now also take into account the impacts of the ruling with its reinsurance partners and will soon announce to the market the estimated net cost of COVID-19 related business interruption (BI) claims to the company.

FBD expects this cost to be well within the range of considered financial outcomes, with FBD remaining strongly capitalised,” said the insurer. 

With over 1,000 firms having similar policies with FBD Insurance the ruling will be welcomed news for many businesses, as well as those in disputes with other carriers.

The ruling in Ireland comes weeks after the UK Supreme Court upheld the judgement on the Financial Conduct Authority’s (FCA) BI insurance test case, ruling in favour of policyholders on the majority of key issues.

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