The verdict of four landmark test cases taken against FBD over its refusal to settle claims for COVID19-related business closures will have widespread ramifications for the livelihoods of many Irish business owners who were forced to close due to public health advice during the pandemic.

Leinster Overview Concepts Ltd, trading as Sean’s Bar in Athlone, Co. Westmeath; Aberken, trading as Sinnotts Bar; Hibernian Way Ltd, trading as Lemon & Duke, and Hyper Trust Ltd, trading as the Leopardstown Inn, are the four pub owners from Dublin and Athlone that have launched the action against FBD, which is due to commence in the Commercial Court on October 6.

FBD’s view is they are not liable for the claims as the pubs would not have attracted any custom during the pandemic even if they had continued to stay open. Further, it maintains that none of its policies provide cover in the event of a pandemic.

As many as 1300 FBD business customers are now awaiting the trial’s outcome which will determine whether the insurer will have to pay out their business interruption claims. 

UK High Court rules against insurers on “majority of issues”

The cases will go to trial in Ireland amidst the backdrop of the recent UK High Court ruling against a number of UK insurers on “a majority of issues” related to the refusal of COVID19 related claims.

The UK’s Financial Conduct Authority (FCA) had sought clarity through the court on disputed language in business interruption contracts from Hiscox, RSA, Zurich and five other insurers held by some 370,000 policy holders.

The FCA said the judgement was a “significant step in resolving the uncertainty being faced by policyholders.”

While the court’s findings will provide a boost for policyholders, the ruling stopped short of finding the eight insurers liable for the 21 policy wordings in the samples reviewed in court. Each individual policy will still require independent review against the court’s findings.

Ombudsman launches investigation of FBD

FBD’s refusal to settle the business interruption claim of a Limerick pub owner whose venue was closed by COVID-19 is now under investigation by the Financial Services and Pensions Ombudsman (FSPO) after the customer lodged a formal complaint with the regulator.

FBD initially sought to stop the investigation until a verdict on the four test cases had been reached in court. It later agreed with the FSPO that the investigation could proceed, however also successfully secured permission from the High Court to take a Judicial Review case of the FSPO’s right to investigate the publican’s complaint while legal action over similar claims from the other four pub owners are in progress.

That means that while the FSPO will continue to investigate the Limerick publican’s complaint, it will not issue a preliminary decision until the outcome of the Judicial Review proceedings in the High Court early in 2021.

The FSPO said that while it believes the legal challenge is not well founded, it recognises FBD’s right to bring the matter before the Court. Despite the pending Judicial Review case, the regulator said it will investigate other complaints that are brought before it.

FBD rewrites policy terms

Meanwhile, media reports state that in August, FBD began rewriting the terms of its commercial insurance policies to rule out business interruption claims for infectious diseases, with the new terms also being used in other commercial policies going forward.

Much now rides on the outcome of the test cases for other pub, bar and restaurant owners throughout Ireland who have been affected by COVID19-related business closures.

While claims will still be subject to individual policy wordings all business customers will benefit from the clarity provided by the Court’s ultimate verdict.

Find out if you have a claim for COVID-19 related cover

If you have been affected by COVID-19 business closures, we can review your policy wording for free to help you determine whether you have a viable claim. This is particularly important now as the test cases prepare for trial. Get in touch with a member of our team today to discuss your circumstances and benefit from the latest, expert advice.