Retail industry group threatens to sue insurance firms over Covid-19 claims

Retail industry group threatens to sue insurance firms over Covid-19 claims

A retail industry group is considering taking legal action against the insurance industry over alleged refusals to pay out to struggling shop owners over Covid-19 claims.

It has been estimated that insurance firms could face a Covid-19 claims bill of up to €20bn from affected businesses, across all sectors.

Retail Excellence Ireland (REI) said that nearly 70% of the 2,000, or so, retailers it represents have business disruption policies, but said that insurers won’t pay out if Covid-19 is not listed on those policies.

REI has labelled industry body Insurance Ireland’s response, to date, as “abysmal” and has written to it seeking a more meaningful level of interaction and assessment of policy claims.

REI chief executive David Fitzsimons said that if an improved response is not forthcoming during next week REI will consider taking legal action against relevant non-paying insurers who have claimants with business disruption policies.

Earlier this month REI warned that up to 110,000 retail jobs in Ireland could be permanently lost if a “decisive” recovery plan is not put in place by the Government.

As a result of such job losses, REI has estimated €800m per year would disappear from the economy through lost employee taxes. It also said that the jobs hit would cost the State around €2.2bn, in one year, in increased social welfare payments.

“The Irish retail industry believes that it will have a key role to play in rebuilding the Irish economy, but it needs a strong official policy response,” it said.

REI has urged government to introduce a rent grant scheme for retailers, implement liquidity supports and cancel all local authority risks for impacted retailers for 12 months, despite such a measure costing the exchequer around €730m.

The reiteration of REI’s warnings come as new survey findings show that British retailers saw their biggest fall in sales, in the first half of April, since the 2008 financial crisis, as stores closed and shoppers were forced to stay at home.

“The lockdown is hitting retailers hard. Two fifths have shut up shop completely for now,” Rain Newton-Smith, chief economist at the Confederation of British Industry (CBI), said.

According to the CBI, two thirds of all UK retailers said the coronavirus had hurt sales, and 44% said they had laid off staff temporarily, while 8% had made permanent job cuts.

Meanwhile, UK grocery sales in Britain rose by 5.5% year-on-year in the four weeks to April 19, according to market researcher Kantar Worldpanel. Consumers made fewer shopping trips but bought more.

Online sales accounted for 10.2% of the total grocery market, Kantar said, having been about 7% prior to the crisis, with the greatest increase among older shoppers.

Although not previously big users of e-commerce, people over 65 in the UK spent 94% more on deliveries than they did a year ago.

Kantar is due to publish latest supermarket sales figures for Ireland next week. Its last set of findings showed March was a record month for grocery sales here, with the average household spending an additional €122 on groceries and total spending rising by 27%.

- Additional reporting Reuters

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