Insurer FBD has increased its estimate of the cost of paying out business interruptions claims due to Covid-related lockdowns from €150m to €183m.
Publishing its half-year report yesterday, the Irish insurer said the increase was primarily due to higher expected legal costs and a reassessment of the estimated amounts that will be paid to customers based on the latest available information including reopening dates of pubs.
In February the High Court ruled against FBD who had argued that insurance policies did not cover business interruption caused by the Covid lockdowns. A quantum hearing on the level of payout took place last month with a final court decision expected in December.
“Once the judgement is delivered we will make claims settlements as expediently as possible with interim settlements of €20m already paid,” FBD said. “The issues to be agreed include the definition of imposed closure, the level of wages to be allowed and any compensation in respect of late payments.”
FBD, Ireland’s only indigenous insurer, reported a profit before tax of €22m compared to a loss of €9m for the same period in 2020. They added 3,500 new policyholders since the beginning of the year.
Separately, FBD said the frequency of motor damage and injury claims has been lower than normal over the past six months primarily due to the Government restrictions on movement. The average cost of injury claims settlements remained slightly lower than that experienced pre-Covid. “This is due to a change in the mix of settled cases, affected by court closures and the inability to engage in pre-trial negotiation with a backlog of cases building up in the courts system,” FBD said.
FBD said motor damage claims and repairs costs are increasing well ahead of general inflation with supply chains still adjusting to Brexit and Covid disruption. “New technology in cars can result in claims costing multiples of the past with replacement sensors, headlights and driver-assisted supports. Property claims are seeing double-digit inflation over a rolling 12 month period.”