The two representative bodies received confirmation from Allianz and FBD, two of the largest providers of business interruption cover to pubs, that they will not be providing this cover.
As a result, the LVA and the VFI have now called on the Government to immediately engage with the Irish insurance industry on this matter.
“This is a disgraceful decision by the two insurance providers,” said LVA Chief Executive Donall O’Keeffe, “At a time of national crisis, with the pub sector on its knees, these insurers have spurned us in our time of need and are refusing to play their part in this emergency situation.
“Many of our members had hoped to use the payments they would receive under their business interruption cover to continue to pay some or all of their staff. During this critical time that would not only help thousands of pub employees and their families, but it would also be in the national interest as it will reduce the demand for social welfare payments.
“Given the tremendous strain that the Exchequer finances will be coming under this seems like the insurers are turning their backs on not just the pub sector, but the entire State,” he said.
VFI Chief Executive Padraig Cribben added, “This situation surely must constitute the very definition of ‘business interruption’. Yet the insurers seem to be hiding between two arguments at present.
“Firstly, that the decision taken by the pubs to close was not mandated by law and secondly that this crisis represents a ‘force majeure’ event.
“Taking all these factors into consideration, we’ve now asked the Government to take immediate action. We would like the Government to engage with the insurance providers on this matter and to publicly outline their perspective on the role of insurers in supporting businesses and their staff. We will also be seeking the Government request to close the pubs to be officially mandated in law.
“We will take all necessary actions to push the insurance providers on this matter and will not rest until they do right by the pub sector and indeed the whole country on this issue,” he concluded.
In a statement put out in connection with Covid-19 over a week ago, Insurance Ireland, which represents 95% of the domestic market for insurance companies, stated that it, “has been proactively engaging with customers to advise them to look at their policy documents as a first port of call if they have any queries in relation to what cover they have in place.
“A good place to start is the Insurance Product Information Document. The first section of the IPID lists what is insured?
“This includes the material damages that are covered under the policy. As there are many differences in cover from policy to policy it is our strong advice that policy holders (both individual and commercial) understand what material damages are covered under their policy.”
It would appear then that most businesses haven’t purchased cover against loss of trade specifically from Covid-19 or any coronavirus even if the Government had closed down the hospitality industry through legislation.
The situation would appear to be little different from the UK where the Association of British Insurers recently stated that, “Irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the Coronavirus.
“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities because it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.
“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.”
As the trade here waits for what will emerge from Insurance Ireland following a meeting due to take place this evening between the main insurers, the Association for Insurance Reform’s Peter Boland told Drinks Industry Ireland, “We’ve asked for the maximum amount of leeway to be given on this; insurance is at the heart of society and it’s therefore a societal issue as such. Pubs could be lost forever here and we’re looking for insurance companies to play their part in this as much as they possibly can on the issue of business interruption and payment of premiums while businesses are closed.”