On-trade

Insurance premia rising despite reduced economic & social activity – AIR

With 63% of claims for business interruption having already been refused by insurers and with them having denied forbearance in 18% of cases, a Cabinet Committee is now essential to deliver insurance reform, believes the Alliance for Insurance Reform which published the results of a major survey clearly illustrating that the grip the insurance crisis has on Irish society has been magnified by the Covid-19 pandemic.
22% of those who’ve renewed their insurance cover since the onset of Covid-19 have experienced a rise in their premium according to AIR.

The intervention from the FCA to increase certainty for pubs making Business Interruption claims was most welcome claimed the BBPA.

Some 55% of policyholders are also concerned about Covid-19-related personal injury claims, finds the survey.

Business Interruption & Forbearance
Tellingly, only 33% of respondents have made a Business Interruption claim. Of these, insurers refused 63% while an additional 33% await a decision. Only 2% have taken their claim further via the Financial Services and Pensions Ombudsman or via legal action.
Insurers have also declined any forbearance (liquidity-related concessions such as rebates, pauses or extensions) in 18% of cases while in a further 12%, the concession has been by way of a credit off the next renewal which doesn’t address urgent liquidity issues and prevents shopping around.
The survey was carried out among Alliance for Insurance Reform members between Friday 29th May and Sunday 7th June.
The 2,095 respondents were spread primarily across the Hospitality, Motor & Transport, Leisure, Retail, Not-For-Profit, Healthcare, Arts & Entertainment and Manufacturing sectors.

Renewals and Premium Rises
The survey also finds that 22% of those who’ve renewed their insurance cover since the onset of Covid-19 have experienced a rise in their premium according to AIR.
“In an environment where there is a substantial reduction in economic and social activity levels for all sectors and as such a massive reduction in risk and turnover, this rise in premiums is a cause for concern for all policyholders,” it states.
“These figures merely confirm what we are seeing every day of the week,” commented Michael Magner, Chair of the Alliance’s Covid-19 Working Group and owner of Cork’s Vienna Woods Hotel, “It’s time for the State to take meaningful action before irreparable damage is done to Irish businesses and voluntary organisations struggling to deal with Covid-19.
“The Department of Finance must get insurers to play their part,” he continued, “The suggestion that this Covid-19 crisis may prove to be a financial Armageddon for insurers is completely undermined by the relatively low level of requests for business interruption payments or forbearance. The Department must now prioritise the ongoing survival of SMEs and voluntary groups which were already threatened by sky-high insurance costs and are now faced with the refusal of insurers to engage on legitimate Business Interruption claims and requests for immediate forbearance.
“In order to protect policyholders from Covid-19-related personal injury claims, the State must now move to indemnify businesses and voluntary groups against such claims and provide clear, detailed unambiguous guidance, customised by sector, on how to best prevent the spread of Covid-19.
“The Central Bank must equally intervene aggressively on behalf of policyholders. General statements are not enough and the Financial Ombudsman (FSPO) must fast-track complaints already received to give urgent clarity to policyholders on where they stand.
“Finally, insurers must vigorously contest opportunistic or exaggerated claims related to Covid-19 in order to avoid a situation where such claims become a cottage industry in their own right.”

AIR Director Peter Boland added, “We cannot afford any further delays to proposed reforms in this area. Our members identified reductions in general damages, a more balanced duty of care, reductions in legal fees and increased sanctions for fraudulent and exaggerated claims as essential reforms in the context of Covid-19. It’s going to take a cabinet committee, chaired by the incoming Taoiseach, to guarantee that the State delivers on these and other essential insurance reforms quickly so that insurance does not hamper the recovery of the nation.”

 

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