FBD ruling offers 'lifeline' to over 1,000 pubs across the country

Lemon & Duke pub was one of the four pubs who brought the landmark test case. Picture Collins Photos

A High Court ruling that FBD must pay out insurance to pubs forced to close because of Covid-19 has thrown a lifeline to more than 1,000 pubs across the country, the industry has said.

A large number of the pubs that will benefit from the ruling have been closed for large parts of the last 12 months.

“Undoubtedly, several hundred pubs would have gone to the wall had this decision gone the other way,” one publican said. "This is not just a lifeline for over 1,000 pubs across the country, it’s the key to their survival.” 

The ruling in the landmark test case brought by four pubs — Sean’s Bar in Athlone, and Sinnotts, The Leopardstown Inn, and Lemon & Duke, all in Dublin — will benefit 1,300 publicans who have a public house insurance policy with FBD, which had claimed that the policy did not cover the Government’s move into national lockdown.

FBD has said it will pay all valid insurance claims and has begun to process claims. One industry source said publicans who are FBD customers could see at least 50% of their claims paid out relatively quickly.

The full amount that FBD will be liable for will be decided at a secondary court hearing on February 17. The company had set aside €30m but analysts estimate it could cost the company double that amount.

With the pubs' test case expected to usher in a wave of similar business disruption insurance claims and court cases, the overall Covid payout bill facing the insurance sector could reach €20bn, according to estimates.

Warning about passing cost on to customes

Opposition parties have warned this must not result in higher premiums for customers.

Sinn Féin finance spokesman Pearse Doherty has warned the business interruption question could become the insurance sector’s tracker mortgage scandal.
He said while many insurers made a strong profit last year, with few pay-outs made due to the various Covid restrictions, business interruption costs could see them make losses this year.

He said this should not be used as an excuse to put up premiums. Mr Doherty said insurance firms insure against risk and have reserves to deal with loss-making scenarios and shouldn’t recoup their losses by rising prices.

People Before Profit TD Bríd Smith said it is “vitally important” insurers are not allowed to do this, adding that FBD must pay out to its pub customers from their profits.

“In 2019, motor insurance claims fell by 2.5% while premiums rose by 42% over the last decade and average 9% profits were made by insurers in 2018,” she said.