96% of ‘business interruption’ insurance claims not successful
Study shows 60% of forbearance claims have not yet been granted or granted in any meaningful way
30 June 2020 | 0
A recent study conducted by the Alliance for Insurance Reform (AIR) reveals some worrying findings about the handling of insurance claims during the Covid-19 crisis.
A massive 96% of those who have made business interruption claims have not had success, according to the alliance’s research. Meanwhile, 60% of forbearance claims have not yet been granted or granted in any meaningful way, while 55% of policyholders are concerned about Covid-19 related personal injury claims.
What’s more, insurance premiums continue to rise on average despite huge ongoing reductions in economic and social activity.
AIR included its research of 2,095 respondents in a submission to the Special Committee on Covid-19 Response regarding SMEs and the hospitality sector.
Observing that “insurers have engaged in an almost blanket refusal to deal with business interruption claims despite clear wording in many cases,” AIR has proposed a number of measures to ensure fairness for SMEs as shown below:
- The FSPO waive the 40-day internal appeal process and mediation option on business interruption cases, fast track legally binding decisions and publish those decisions
- The Central Bank (CBI) initiate a test case similar to that being conducted by the Financial Conduct Authority in the UK, to resolve contractual uncertainty around the wording of BI policies.
- The Central Bank seek to broker a deal on business interruption such as those being brokered in other jurisdictions.
- The Central Bank to seek certification from the CEOs of insurers operating in Ireland as to their handling of business interruption claims.
Describing the response of insurers to requests for forbearance as “patchy”, the alliance has asked that the Department of Finance and the Central Bank “take a more hands-on approach to this issue so that insurers operating in Ireland, regardless of where they are headquartered, acknowledge the difficulties their customers are in right now and respond accordingly with meaningful forbearance concessions.”
The submission also drew attention to a statement which the Minister for Finance made on this issue on 17 April, in which he expressed “concern that some insurers have adopted a ‘blanket’ rejection of all business interruption claims. Failure to pay certain policies in the context of the industry clarifications reinforced the minister’s view that some insurers were doing the industry significant reputational damage and were not treating customers fairly.”
However, AIR noted that in a conference call with the organisation on 17 June, the Minister expressed the view that he does not have the right to demand action from insurers on business interruption and that this situation raises issues that are best dealt with by Ireland’s regulators.