• Cyril McAree

Insurance Companies: Can’t live with them, can’t live without them.

After years of the hotel and catering sector having to put up with their business partners in the insurance sector repeatedly taking liberties, the current crisis has cast this forced marriage into sharp relief. It’s at times like these when arguments develop over the interpretation of fine print in the pre-nuptials.

The forced closure of all restaurants and pubs in the country has presented a major headache for insurance companies and it was hardly surprising to find that they are now doing all in their power to remain solvent at the expense of their client

The particular point that has been problematic in terms of compensating restaurants for the loss of income has revolved around who precisely gave the order to shut down. Ordinarily, insurance won’t kick in unless a medical officer ordered the shutdown or unless a specific Government order forced them to shut down.

Wasn’t that exactly what happened? Didn’t all the restaurants in the country shut down on direct orders from the Government who, in turn, were following direct advice and direction from the country’s most senior health officer? Not so, say many insurance companies, many of whom have interpreted the closures as “voluntary actions”.

You can see what they’re trying to get at: Fast-food chains McDonald’s and Supermacs, for example, both closed all their outlets on the same day on an apparently voluntary basis but that action was only a result of Government action rendering their market unprofitable. Trying to tease out which premises closed because their customer base dropped and which ones closed because of a direct order to do so seems like a petty argument at best. But it’s one of a number of petty arguments that the insurance industry seems determined to put forward in their own fight for survival.

“There is a lot of debate on ‘business interruption’”, says Elaina Fitzgerald Kane, recently-elected President of the Irish Hotels Federation, “and we have no commitments from insurance brokers or the insurance industry at this point in time. There’s simply no sign of support being made available. “There’s almost this sense that insurance companies are trying to find reasons not to contribute or not to get involved in this space.”



Pic Shows: Elaina Fitzgerald Kane, President of the Irish Hotels Federation


Adrian Cummins, President of the Restaurant Association of Ireland doesn’t see anything legitimate in the arguments being forwarded by insurance companies and sees it all as smoke-and-mirror tactics: “We’re of the opinion that the insurance companies are reneging on their duty to pay out on business disruption,” says Cummins. “They’re trying to wriggle out of it as best they can. Because of the scale of the crisis, they’re doing everything in their power to frustrate business owners, to impede claims and they are actually profiteering on the back of the crisis at the moment.”

For hoteliers and restaurant owners, there’s nothing new in the behaviour of their insurers – it’s something they’ve been complaining about for several years. In the hotel & catering sector, there is no sense of being in the crisis together with the insurance companies and not a shred of sympathy for their plight: “Not one bit,” says Cummins. “We’ve seen insurance companies making hundreds of millions of euros in profit in 2019. Now, when the business has paid its insurance premium over years and years and it needs to put in a claim, the insurance companies are doing everything in their power to stop it.” “I don’t believe that there is any sympathy for them because at the end of the day, we pay very high rates and many would say that we’ve got little value in terms of levels of fraudulent claims,” says Fitzgerald Kane. “The whole system needs a review. There’s this whole system that’s so ineffective and highly inequitable. You’re coming from that background into this period of unprecedented crisis and there’s no evidence of any sign of ‘give’ from the insurance industry.” “They (the insurance companies) have basically circled the wagons,” says Cummins. “The last thing they want is for the Government to tell them to pay out or give them an instruction. The Government has a role in this as well. Through the Central Bank and the Insurance Regulator, they have a role in this crisis. They’re abdicating that responsibility.” The Central Bank recently issued a statement requesting that insurance companies give claimants the benefit of the doubt and that they treat them more fairly but Cummins believes that those in charge need to go further in enforcing fair play in the restaurant sector. “They need to go a long way further than that,” he says. “I think they need to step up to the plate in a real way now and do the right thing.” “From the IHF perspective,” says Fitzgerald Kane, “we’re looking for the Minister for Finance to do two things for us – one is to set up a fast-track system to assess whether individual policies cover business interruption during the Covid-19 crisis. The second thing is we’re looking to get commitment from insurers that they will pause, extend or give a rebate on policies covering organisations that have closed down for the duration of the crisis.” In the coming weeks, we will have to see how this situation plays itself out. Just as with most aspects of life in the Covid-19 era, it will surely necessitate some robust Government intervention.

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