The organisation’s director of GI calls on insurers to be ‘flexible’

Brokers Ireland, a representative body for more than 1,200 general insurance and financial brokers in Ireland, has called on the government to sit down with insurance chief executives in order to explore an industry-wide response to Covid-19.

The firm’s director of general insurance Cathie Shannon emphasised that insurers need to show flexibility during this unprecedented situation, especially in relation to insurance covering business costs and losses arising from the coronavirus outbreak – she added that insurers should consider options that protect policyholders from going out of business permanently as a result of Covid-19-related closures.

She told Offaly Independent: “While businesses forced to close as a result of the pandemic may not have specific cover for such, some will have clauses that in certain circumstances may cover notifiable human infectious or contagious disease, which may be contingent upon a government decision to close.

“We would encourage insurance companies to be flexible around coverage decisions taken, particularly given that businesses are being responsible in doing the right thing to protect consumers and staff, and also [that] those businesses that are forced to close without such a government declaration because business had all but dried up.”

Shannon added that while many companies will have business interruption cover, policy wordings can vary, which creates confusion for policyholders – she said that bringing clarity to what is or is not covered should be a priority.

This includes insurers being flexible regarding periods of business closure, in terms of the policy terms and conditions imposed and the premium payments that are expected from policyholders.

Earlier this month, Aviva chief executive Maurice Tulloch confirmed that Covid-19 coronavirus is not classified as a notifiable disease within its commercial BI policies, as the firm only offers a “minimum coverage” of included diseases.

He said: “On our policies, this [coronavirus] is not a notifiable disease, so we have minimum coverage in respect to business interruption in commercial. We’ll always respond to our customers when our products are triggered.”

Aviva’s business interruption policy wordings specifically excludes claims related to new and emerging diseases - this includes Covid-19 coronavirus.

This distinction to policy small print came about after the 2003 SARS outbreak, when Aviva sought to clarify what was, or wasn’t, covered under its BI insurance.

Banking support

Shannon did, however, welcome the meeting between Minster for Finance Paschal Donohoe and the banks.

“The payment break of up to three months and the provision of working capital support to support businesses and personal customers is a very welcome step. However, if the measures still allow lenders the option of charging interest payments in respect of the period it would be deeply disappointing,” she said.

“If consumers and businesses are devoid of income in this extraordinary and unprecedented situation then it would be unreasonable to expect them to pay interest for the period.

“If decisions on this aspect rest with the individual customer and his [or] her bank, then it would be very unsatisfactory and go against the spirit of solidarity the government is urging.

“If this is the scenario, we would suggest the government should negotiate further and attempt to ensure that interest payments in respect of the break period are not added on at a later point.”

Shannon added that loans are not the answer – she explained that this will only pile up debt, which is unsustainable if the current climate extends beyond a few weeks.

“The government should now consider exploring with insurance company CEOs how the insurance companies can take the lead in demonstrating corporate social responsibility during this unprecedented crisis,” she said.