Over 420 restaurants to start legal action over unpaid Covid-19 disruption insurance

Restaurants Association of Ireland to progress insurance issue through the courts

Restaurants Association of Ireland chief executive Adrian Cummins.

More than 420 restaurants, hotels, and bars are to proceed with legal action against 10 insurers over unpaid Covid-related business disruption claims in the coming weeks.

The Restaurants Association of Ireland (RAI) will look to progress the issue of unpaid disputed business interruption insurance, for its members, through the courts, having had minimal success in initial communications with the insurance firms.

Nearly a month ago, the RAI wrote to 12 insurers on behalf of 423 of its members, urging them to pay out on business interruption claims to cover trading losses brought about by the Covid-19 crisis. 

The association originally gave insurers a seven-day window to reply and agree to make payments. 

It said it would take legal action against any of the firms not willing to pay out on valid claims.

However, upon that deadline expiring, only one company, Hiscox Ireland, replied and agreed to pay cover and not challenge the claims.

Since then, QBE has also replied in a similar manner, meaning the threat of legal action over unpaid cover is currently hanging over 10 insurers.

Other insurers written to include FBD, AIG, Aviva, RSA, and Allianz.

The initial move by the RAI followed the landmark High Court ruling that FBD must pay out business disruption insurance for Covid-19 business damage to four pubs, with that case likely to benefit around 1,300 pubs which have the same policy with FBD.

The RAI also recently said it wants the Central Bank, the Financial Services and Pensions Ombudsman, and the Competition and Consumer Protection Commission to intervene.

The association has since formally written to the Central Bank, as a back-up mechanism, asking it to take its own legal case against insurers and to compensate restaurants and bars. 

Central Bank governor Gabriel Makhlouf recently said that the regulator would not tolerate insurers failing “to do the right thing” by customers.

“We continue to expect that firms honour and pay valid claims and do so urgently. Any continuing failure to do the right thing by your customers is inexcusable and we won’t hesitate to take action accordingly,” he said.

However, no response from the Central Bank to the RAI's letter has been forthcoming as yet.

Sinn Féin has also written to the Central Bank urging a widespread tracker mortgage-style probe of insurers.

Amid a flurry of criticism, this week, over the lack of clarity for business in the Government’s revised Living with Covid-19 plan, the RAI said 150,000 hospitality workers are awaiting job certainty and the survival of restaurants and other businesses are at stake if better and more appropriate financial supports are not forthcoming.

“The sector has been closed almost a year now and has complied with restrictions and lockdowns preventing businesses and employees from being able to work and to earn a living.They are now tiring and running out of money and in need of sight of the end goal,” said RAI chief executive Adrian Cummins.