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Finance Minister Paschal Donohoe has warned insurers that they should offer some rebates to motorists because traffic has plummeted during the coronavirus crisis at a time when profits are high.
During a virtual meeting yesterday afternoon, he also told the Insurance Ireland lobby that its members’ reputations are at stake amid concerns that some rely on fine print and technicalities to avoid business interruption payments, since that much of the economy is in the Covid-19 blockade.
“The main message I wanted to convey to the insurance industry, through Insurance Ireland, is the need for the industry to help itself and do the right thing for clients during this time. I made it clear that not doing so will be very damaging to the sector’s long-term reputation, “said Mr. Donohoe after the meeting.
Motor insurance
“Regarding the treatment of auto insurance policyholders, I noted that a combination of the very profitable part of this market in the last 12 months, when combined with what is likely to be a significant reduction in claims for this period, provides a strong argument for some form of reimbursement of consumer premium packages. “
Insurance Ireland said that while no auto insurance reimbursements were being made to date in the UK or Europe, “it pledged to reflect on the Minister’s concerns with its members as a matter of urgency.”
Most business policies that cover losses in the event of a business interruption do not offer coverage for infectious diseases. However, insurers generally reject claims even in policies that mention notifiable diseases on the grounds that they were intended to cover isolated outbreaks and not a pandemic.
“On the subject of business interruption insurance, insurers understand that this is cause for concern in the market. This is a complex matter. No insurance market in the world offers widespread insurance coverage for pandemics and Ireland is no exception, “said Insurance Ireland, adding that companies” will award each claim fairly and consistently in accordance with the terms and conditions of the policy. ”
central bank
The central bank has ordered insurers to regulate the presentation of detailed breakdowns of their business interruption policies by the end of April, including data on contracts in ambiguous language and how they are being treated.
The bank said in a letter to chief executive officers of insurance late last month that while most of the terms of the policy are clear in terms of coverage and what exclusions exist, “when there is doubt about the meaning of a term , the interpretation most favorable to your client must prevail. ”
The clear risk for insurers is that they may find themselves caught up in a central bank review similar to the trailing mortgage debacle, which has cost the banking industry € 1.5 billion, according to industry and regulatory sources.
Goodbody Stockbrokers analyst Eamonn Hughes said in a note to clients on Friday that the industry cases had been helped as the UK Financial Conduct Authority, the supervisor of the parent groups of some of the major insurers operating in Ireland, said Thursday it estimated that most trade policies “have basic coverage, do not cover pandemics, and therefore would not be required to pay in relation to the Covid-19 pandemic.”
“However, the Central Bank and the Minister of Finance here appear to be prepared to keep the pressure on the industry in Ireland, so it appears that this problem will run for some time, probably with little clarity, but with persistent risks to insurance industry, “Hughes said.
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