Our work to date has focused on and will continue to focus on highlighting the negative impact of persistently high premiums and calling for real reforms that will quickly reduce liability and motor insurance premiums to affordable levels and keep them that way.
However, we cannot ignore the impact of the COVID-19 crisis and in particular, the apparent blanket refusal of insurers to cover any business interruption caused by the crisis. So the following is an update of what we are doing in this area as well as an update on our ongoing insurance reform work.
CORONAVIRUS/COVID19
Individual member organisations whose members are being directly impacted by the insurance industry stance on business interruption are taking direct action on the issue up to and including legal action. The Alliance is acting in a support role to add momentum and a broad perspective on the issue as well as seeking reductions in policy costs to reflect the reduction in commercial activity caused by the crisis.
Having issued an initial press release on Friday last we have:
- Written to Paschal Donohoe asking him to “urgently meet representative bodies of the affected businesses and the main insurers to quickly turn a blanket ban into a sensible resolution of the problem.” He has so far responded by calling on insurers “not to reject businesses’ claims for loss of earnings if they were advised by the Government to shut up shop to contain the spread of Covid-19, amid evidence the industry is relying on fine print and technicalities to avoid payouts” according to media reports.
- Written to the Governor of the Central Bank asking him that the Bank “in its role as the consumer protection agency in the insurance market, makes a public statement on its approach to the issue and urgently meets representative bodies of the affected businesses and the main insurers to quickly turn a blanket ban into a sensible resolution of the problem.” We are awaiting a reply.
- Written to the Financial Services Ombudsman asking him to “urgently meet representative bodies of the affected businesses and the main .. to quickly determine opportunities to fast-track disputes in this area and turn a blanket refusal into a sensible resolution of the problem.” We are awaiting a reply.
- Asked Insurance Ireland to coordinate a positive response from the insurers with regard to reductions in policy costs as the crisis reduces their exposure to risk.
We have also been in regular contact with the Department of Finance and have supplied them with sample policies which we believe cover business interruption due to the COVID-19 crisis; and this morning the DoF are telling us that one insurer has conceded that some policyholders will be able to make a claim, while they are waiting for replies from others.
Media-wise we were on Galway Bay FM and the Last Word on Today FM yesterday about the issue and will be on Taking Care of Business on Midlands 103 tonight. We have also been giving updates to the newspapers.
https://www.todayfm.com/shows/last-word-matt-cooper-234816
(At 00:16:50hrs, Monday 23rd March)
https://galwaybayfm.ie/shows/galway-talks-with-keith-finnegan/
(first clip on the page as of 10am today)
Robert Troy, the FF TD has been carrying out a survey regarding businesses affected by the business interruption issue. As of last night he had 417 responses. Highlights are as follows:
57% of respondents said they had decided to close their business on public health grounds. 43% had not closed.
60% of respondents have already been told by their insurer that they cannot make a claim for business interruption. Most of the remainder are awaiting a decision or have not enquired.
The bulk of rejections are on the grounds that:
- Businesses asked to close, not told to
- Closure by government not covered
- Insurer does not cover pandemics (seems to be mainly FBD)
- Policy only covers damage on the premises
- Covid19 has to have caused closure by occurring on the premises
- Only cover material damage
- Variations on “Covid19 not on our list”
- “Not on list of notifiable diseases” (it is)
- Variations on “Just not covered” including “Not covered under any insurance policy in the world.”
- Act of God and Force Majeure also cited
- Business Interruption not on policy
The issue is clearly urgent given the responses to the question:
Will your business survive an extended closure period (1month -4 months) without insurance damages?
Very Unlikely: 77
Unlikely: 146
Subtotal 54%
Neither Likely nor Unlikely: 88 (21%)
Likely: 80
Very Likely: 19
Subtotal 24%
I was struck by how many responses say they ‘were told by the broker’ or ‘told by the insurer’ that they didn’t qualify for damages under business interruption. There’s a real need for an ‘honest broker’ to decide whether this blanket ‘NO’ is valid on a policy-by-policy basis.
Robert Troy was on Morning Ireland yesterday about this survey and the responses necessary. We are in regular contact with him about this.
INSURANCE REFORM
On our insurance reform priorities, we are actively engaged with the Programme for Government negotiators to ensure our priorities are reflected in the next PFG:
- Reduce general damages on minor, fully recovered injuries.
The Judicial Council’s Personal Injuries Guidelines Committee will meet for the first time in April (subject to the COVID-19 crisis) and is then obliged by law to submit its first draft personal injury guidelines to the Board of the Council by the end of October 2020.
What happens next depends on the attitude of the board which has up to 12 months to mull over the draft guidelines before adopting them, but may choose to fast-track them as they have the whole PIGC process to date. We continue to endorse this judicial approach to reducing general damages but have reserved the right to switch to the legislative approach if the PIGC does not deliver substantial reductions to general damages for minor injuries.
With regard to the legislative approach, the Alliance made a submission to the Law Reform Commission Issues Paper on the issues surrounding a legislative fix to this problem, as did several other member organisations including ISME who are the lead organisation on the legislative approach. A final report on this approach will be published at the end of 2020 earliest.
- Review and re-balance the “common duty of care” to require the occupier to take a duty of care that is reasonable, practical and proportionate
LEGISLATION: While Fianna Fail was quite vague in their GE2020 manifesto, the party assures us they are committed to amending the Occupiers Liability Act 1995 to help in rebalancing the Duty of Care.
Both Fine Gael and Sinn Fein also expressed a desire to address the duty of care issue in their manifestos.
JUDICIARY: We have written to the Secretary of the Judicial Council requesting a meeting with the Judicial Studies Committee to discuss their approach to duty of care and the implications for policyholders.
INSURERS: We plan to meet the main insurers regarding their settlement strategies, particularly with regard to interpretation of the duty of care, as well as a list of other issues. This will now happen once the coronavirus issue has settled down.
DISCLAIMERS: Michael D’Arcy who is now a FG candidate for the Seanad, has committed to asking the incoming Government to “Consider changes to the Occupiers Liability Act and the Civil Liability Act, to strengthen waivers and notices to increase protections for consumers, businesses, sporting clubs and community groups.” We will hold him to this commitment or ask others to pursue it if he does not get into the Seanad.
COMMUNICATION: We have started to highlight duty of care issues in recent court decisions on our social media platforms and will ramp this up as we move forward with the project.
- Fully-funded Garda response to insurance fraud
No concrete developments yet again – no funding has yet been allocated to the Garda response to insurance fraud. The Gardaí are reporting that they do not have funds to even purchase computers or pay analysts to assist their insurance fraud response. It is up to the new Government to fund this.
- Insist on insurers committing to a schedule of forecast reductions for reforms
We must have some clarity from insurers on the scale of reductions we can expect from the various reforms being pushed through. This is all the more pressing since the December publication of motor insurance statistics by the Central Bank which show that for motor insurance at least, insurers have been doing quite well in recent years. The Department of Finance continues to work on this with Insurance Ireland. We await a result.
- Cabinet Committee: Finally we have asked the parties negotiating to form the incoming government to establish a Cabinet committee chaired by An Taoiseach to coordinate action and ensure the necessary reforms are put in place urgently; with An Taoiseach reporting to the Dáil on a monthly basis on progress.
CONSUMER INSURANCE CONTRACTS ACT 2019
This Act was signed into law just after Christmas but has still not been commenced by the Minister for Justice.
It is a wide-ranging Bill based on the 2015 Law Reform Commission report; sponsored by Pearse Doherty (SF) and supported by Michael McGrath of FF and Min. Michael D’Arcy. When commenced, it will adjust the balance of power between insurers and policyholders. It will apply to ‘natural persons’ as well as ’incorporated bodies’, ‘sole traders, partnerships, trust clubs or charities with an annual turnover in its previous financial year of €3 million or less’.
The Alliance has engaged extensively with Sinn Fein on the development of elements of this legislation. Equally, the Department of Finance has actively taken our views into account.
The legislation is not expected to bring down the cost of insurance in the short term but will make purchasing and using insurance products easier going forward.
WHAT YOU CAN DO IN THE MEANTIME?
- Contact your local FF, FG, Green and Independent TDs and Senators. Ask them to push for the five actions listed above (reduce general damages, rebalance the duty of care, Garda response, get commitments from insurers and cabinet committee) to be added tothe Programme for government and dealt with as a matter of urgency. This is all the more urgent as we plan our recovery fro mthe COVID-19 pandemic.
- 2. Tell us your stories! Contact the Alliance if you can help at peter@insurancereform.ie
- Continue to Like, Share, Comment and Retweet our posts on Twitter and Facebook
Above information issued on 24th March 2020.