RegSol Blog

Central Bank publishes Business Interruption Insurance Supervisory Framework

September 2020

Since the start of the pandemic there has been focus on business interruption insurance. There have been lots of items in the media regarding claims being made and the difficulties faced by many claimants particularly with respect to the interpretation of business interruption.

In this context on 5th of August 2020, the Central Bank of Ireland published its Business Interruption Supervisory Framework.

In summary:

  • Framework sets out the Central Bank’s expectations of insurance firms in handling COVID-19 related business interruption insurance claims
  • Where customers have an entitlement to claim under a business interruption insurance policy, the Central Bank expects that claims will be processed and paid promptly and fully
  • Where cover and related issues are disputed, the Central Bank expects firms to pay the reasonable costs of customer plaintiffs in agreed test case litigation
  • The Central Bank is aware that in many cases BI insurance policy wording will be clear in relation to customer entitlements concerning COVID-19 related claims. However, where there is a doubt about the meaning of a term, the interpretation most favourable to the customer should prevail.
It is notable that the Central Bank has included within it’s Covid-19 SME information portal a specific FAQ with respect to business interruption. This FAQ sets out that if operations have had to be scaled back because of COVID 19 or business has had to close but the insurance company has declined the claim based on Business disruption clauses. The Central Bank has said:

“Where a claim is made because a business has closed as a result of a Government direction due to contagious or infectious disease, the Central Bank is of the view that the recent Government advice to close a business in the context of COVID-19 should be treated as a direction. This is a view that has also been set out by the Minister for Finance, Public Expenditure and Reform. Firms must ensure that claims are appropriately assessed and where there is insurance cover in place that claims are accepted and paid promptly.”

You can access the FAQ here: Covid-19 Small and Medium Enterprises FAQ

You can access the supervisory framework press release here: 
COVID-19 and Business Interruption Insurance Supervisory Framework

By Judy de Castro
Regulatory Consultant