Sir, – As part of an academic research project, I have reviewed some insurance policies which cover business interruption. One striking observation is how many clauses are badly worded. More attention was paid to delineating cover for computer viruses than for human ones.
Equally obvious is that most insurers foresaw pandemic potential. They protected themselves by imposing inner limits at significantly lower levels than would apply if, say, a premises burnt down. Take the example of an establishment with a sum insured of €1 million turnover for an indemnity period of 12 months. They may find that cover for losses resulting from closure by a public authority because of a disease outbreak is limited to €25,000. Other policyholders may find that indemnity is limited to 12 weeks of losses caused by closures imposed for sanitary measures.
Also of relevance is that many insurers issued policies with these lower exposure caps to some policyholders last year while selling cover to other policyholders without such inner limits. One cannot review a single policy in isolation. Are imprudent underwriters who made bad bargains in the past now seeking protection at the expense of hard-pressed policyholders?
Some policies contain a clause that the insurance is void if the policyholder goes out of business. That might enable an insurer to evade paying out under otherwise applicable cover. Is this a factor behind the blanket refusals by insurers of valid claims?
There are two messages.
First, if the wording of cover and/or exclusions are anything other than crystal clear then the legal precedents indicate that interpretations which are ambiguous will be decided in favour of policyholders.
The second message is that for policyholders with an annual turnover of up to €3 million, the Consumer Protection Code of the Central Bank applies. In brief, this requires insurers to assist claimants and to point out clauses that may be of benefit to them.
The insurer must set out clearly in writing the basis of their decisions on claims and must do so within 10 business days of such decisions. If policyholders are dissatisfied they may then lodge a formal complaint with the insurance company, which is extended a further 40 days to produce a “final response letter”.
Many insurers seem to be dragging out that internal review process for no good reason.
It is only when a consumer has secured the “final response letter” that the matter can be submitted to the Financial Services and Pensions Ombudsman (FSPO). Most disputes resolved by the FSPO are concluded through mediation, which is generally more cost- and time- efficient than litigation or arbitration. No fees are charged by the FSPO for investigating and adjudicating complaints.
Any parties in dispute, regardless of their turnover levels, can voluntarily agree to mediation.
Government is busy enough without having to spend time on pleading, cajoling or threatening systemic sectors of the economy to discharge their clear obligations.
The role of the insurance industry in Ireland was in question before Covid-19 and that will be even more hotly contestable in the recovery plan – but that is for another day. – Yours, etc,
DOROTHEA DOWLING,
(Former Chairwoman,
Personal Injuries
Assessment Board,
Motor Insurance
Advisory Board),
Dublin 6.