(Reuters) – Ireland's Supreme Court ruled on Friday that four public insurers insured by the FBD were entitled to be compensated for losses under lock-in claims, in a test case that could have implications for over 1,000 similar contracts. Pubs have been closed for large parts of the last 10.5 months due to COVID-19 restrictions which were toughest on bars that do not serve food. They are only allowed to trade for a total of two weeks and may not be opened at all in Dublin.
The court heard in October that the FBD had sold the policy in question to around 1300 interpreters across Ireland, ranging from small rural pubs to larger urban bars. In July, the FBD estimated that the claims would cost 30 million euros (36 million dollars).
"It should never have come to this", Noel Anderson, CEO of Dublin's Lemon & Duke, one of the four interpreters who took the case. , said in a statement.
“We were forced to go through ten months of deep financial uncertainty, significant additional risks in taking this action as well as extensive stress and efforts to achieve a result that should have been clear from the start.
The FBD stated that it was determined to pay all valid claims and would arrange interim payments pending clarity on the final quantity. It said it expected the cost to be "within the range of financial outcomes assessed."
Ireland's latest shutdown shut down short bars again on 24 December and is unlikely to be lifted until April at the earliest.
In each of the four cases, the FBD refused coverage because the proposed closure did not occur as a result of a COVID-1
Judge Denis McDonald rejected the argument in a written judgment of more than 200 pages. He said the pubs can be compensated for losses beyond the period of closure imposed until those losses cease or the damages period ends.
The issue of quantifying the losses will be addressed at a later date and the sides will agree. at the next step in court on February 17, the judge said.
The shares of Ireland's only domestic listed insurance company were 1.4% lower at € 6.98 at 1255 GMT.
The ruling follows a similar decision by Britain's Supreme Court last month. and a French court last year.
Irish Deputy Prime Minister Leo Varadkar, who as Secretary of Commerce has introduced a number of state aids to keep closed companies afloat, said the ruling was welcome news for small businesses across Ireland.
The Bank of Ireland also welcomed the decision, saying it would carefully examine the impact on insurance companies' customers. The regulator has estimated that there are around 90,000 business interruption policies in Ireland, some of which provide pandemic protection.
Representative groups for pubs urged insurers to quickly review their policies and pay all valid claims immediately.
More insurance and risk management news about the coronavirus crisis here.