The Central Bank has told insurance companies not to force all holders of similar policies to take legal action in order to benefit from test cases linked to business interruption claims.
Earlier this year, the High Court ruled in favour of four pub owners involved in a test case against insurance group FBD. The publicans had made claims for losses due to business inter- ruption as a result of COVID-19 restrictions. FBD had originally argued that the policies did not cover events such as the pan- demic.
On 11 June, the regulator said that, in cases where the final out- come of a legal action taken by customers would have a wider beneficial impact for similar
customers, insurers should make sure that all customers received that benefit.
“If an insurance policy is inter- preted in any legal action in a manner favourable to policy- holders, the Central Bank is of the view that an insurer would not be acting fairly, and in the best interests of its customers, if it does not give the benefit of that outcome to other similarly placed policyholders,” the bank’s director of consumer protection, Gráinne McEvoy, said in a letter published on its website.
“Insurers should not insist on policyholders pursuing a mul- tiplicity of legal actions dealing with similar issues,” she added.
The Central Bank said that it also expected insurers to look at the outcomes of legal actions linked to policies offered by other firms with similar business interruption clauses, and to give the benefit of those outcomes to its policyholders where appro- priate.
A supervisory framework doc- ument, COVID-19 and Business Interruption Insurance, published by the Central Bank last year, said that the term ‘legal action’ included arbitrations, proceed- ings before the courts, and cases before the Financial Services and Pensions Ombudsman.