Insurers will be expected to pay the legal costs of customers who have mounted test court challenges over disputed business disruption policies during the Covid-19 crisis.
The requirement is part of a so-called regulatory framework, established by the Central Bank to govern the behaviour of insurers.
Publicans have launched legal cases against insurance firm FBD, claiming that the company and other insurers ought to pay out on business disruption policies. The insurer says a widespread lockdown under the Covid-19 health crisis is not covered in many such policies.
Derville Rowland, director general of financial conduct at the regulator, said that its framework takes account the "immense pressure on many businesses". The framework reiterates our core message to firms: That they honour valid claims in full and pay them promptly," she said.
“Furthermore, where cover is disputed and businesses have pursued litigation, insurance firms should be cognisant of the significant costs burden faced by their customers," she said.
"We, therefore, expect that in circumstances where the firm obtains the benefit of a court’s interpretation of issues at hand, a firm should agree to pay the reasonable costs of customer plaintiffs in agreed test case litigation and should not seek its costs against these plaintiffs," Ms Rowland said.
The Central Bank reiterated it expects insurers to take into account the interests of its customers.
"In line with regulatory requirements, insurance firms have an obligation to act honestly, fairly and professionally in the best interest of customers," it said.