Financial Services and Pensions Ombudsman publishes latest Digest of Decisions highlighting complaints from businesses
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On 29 July 2021, the Financial Services and Pensions Ombudsman (the "FSPO") published his sixth Digest of Decisions. This is the first Digest published by the FSPO that focuses entirely on legally binding decisions arising from complaints made by businesses, including sole traders, partnerships and companies.
The decisions highlight the issues leading to complaints from businesses that meet the eligibility requirement of having a turnover in the previous calendar year, of less than €3 million, in order to bring a complaint to the FSPO.
The Digest features 21 decisions to include 17 insurance related decisions and 4 banking related decisions. Of the 17 insurance related decisions, 12 of those decisions relate to the investigation of complaints relating to business interruption insurance many of which involve a Covid-19 element.
Business interruption insurance complaints
The decisions featured in the Digest in relation to business interruption insurance claims highlight the importance of understanding the extent of cover provided by an insurance policy and any conditions or limitations to that cover. Some complainants were of the view that the closure of their business on foot of government restrictions in the wake of Covid-19, or other circumstances arising from the pandemic, would automatically be covered by their insurance policy. The decisions issued by the FSPO highlight that the specific wording of the insurance policy did provide indemnity for such circumstances, while in other complaints there was clearly no indemnity available under the complainant's insurance policy.
Key features of the Digest
Outbreak of disease within a 25-mile radius
A number of other decisions featured in the Digest relate to a policy clause in insurance contracts that stated that the insurer would indemnify the insured for loss arising from interruption of, or interference with, the business following an occurrence of a notifiable disease within a radius of 25 miles of the business premises. In one such decision, the FSPO upheld a complaint by a business owner who closed her hair salon due to a high presence of Covid-19 in the area and not being able to implement social distancing guidelines in the hair salon. The FSPO determined that it was a reasonable interpretation of the complainant's insurance contract that any occurrence of Covid-19 within the 25-mile radius was enough to cover her once Covid-19 can be shown to have caused interruption to the business. The FSPO found that by denying the complainant's claim, the insurer had acted “inappropriately, unfairly, unreasonably and unjustly” and upheld the complaint directing the insurer to make an advance payment of policy benefits of €2,000 to the salon owner pending the calculation of the total payable, as well as a further payment of €750 in compensation.
Outbreak of any notifiable disease occurring at a business premises
A number of complaints investigated by the FSPO cited policy clauses that required that the loss of income be a direct result of interruption caused by an outbreak of any notifiable disease occurring at the business premises. For example, the FSPO accepted that an insurer was entitled to refuse a claim where the insurance policy made it clear that there must be an incident of Covid-19 contracted from the premises for cover to be given. In this complaint, a dentist closed her dental practice as a result of the Covid-19 outbreak. The FSPO was satisfied that the insurer was clear in advising that for a claim to be allowed, it must be proven that a person had contracted Covid-19 at the premises and noted that the business owner had not provided such evidence when making her claim.
Outbreak of disease not listed as an "insured peril"
In other decisions in relation to business interruption insurance, an outbreak of disease was not listed as an "insured peril". This meant that those policies did not cover such an eventuality. In one such decision, the FSPO decided not to uphold a complaint because the insurance policy simply did not cover the outbreak of disease. A landlord had been affected by the outbreak when his tenant was no longer able to pay full rent. The insurer initially advised the landlord that he would be covered for loss of earnings if there had been an outbreak of the disease at the premises, resulting in its closure by the relevant authority. However, the insurer later advised that this information was incorrect for the insurance policy in question and that he would only be covered for loss of rent if there had been actual damage to the property arising from an insured peril. The FSPO accepted that there was a broad range of insured perils in the landlord's insurance policy, however the outbreak of disease was not one of them and therefore did not uphold the complaint.
Notification of claims
Two of the decisions featured in the Digest demonstrate the serious consequences that can follow for the insured because of a failure to report either a potential or an actual claim in accordance with the requirements of the policy of insurance. In one such complaint, a doctor received a personal injury claim involving a member of his staff. The injury occurred on the doctor’s premises and the doctor was the one to administer sutures to the injured staff member. The doctor failed to notify his insurer straight away as was advised in his insurance policy. The insurer was not notified until 10-months after the event had occurred. Consequently, the FSPO accepted that the insurer was entitled to refuse a claim and did not uphold this complaint.
The second decision involved an accident experienced by an employee of a construction company. Ultimately there was a clause within the insurance contract that placed the policy owner under an obligation to "immediately" give notice of any event that may give rise to a claim. With this clause in mind, the FSPO accepted that a delay of 175 days did not fall within the requirements of the claims procedure and consequently did not uphold the complaint.
Commenting on the publication of the Digest, the Ombudsman, Mr. Ger Deering, said that he believes “the decisions featured in this Digest will assist businesses, and indeed individuals, to make more informed decisions in relation to insurance and banking products and services.”
By publishing legally binding decisions and Digests of Decisions, the Ombudsman aims to enhance transparency and understanding of his powers and the services provided by the FSPO.
The sixth Digest of Decisions can be accessed here and the FSPO’s Database of Decisions, which has the full text of over 1,100 decisions, can be accessed here.
Written by Maria Curran, Hugh O'Neill & Laura Gannon
A number of other decisions featured in the Digest relate to a policy clause in insurance contracts that stated that the insurer would indemnify the insured for loss arising from interruption of, or interference with, the business following an occurrence of a notifiable disease within a radius of 25 miles of the business premises. In one such decision, the FSPO upheld a complaint by a business owner who closed her hair salon due to a high presence of Covid-19 in the area and not being able to implement social distancing guidelines in the hair salon. The FSPO determined that it was a reasonable interpretation of the complainant's insurance contract that any occurrence of Covid-19 within the 25-mile radius was enough to cover her once Covid-19 can be shown to have caused interruption to the business. The FSPO found that by denying the complainant's claim, the insurer had acted “inappropriately, unfairly, unreasonably and unjustly” and upheld the complaint directing the insurer to make an advance payment of policy benefits of €2,000 to the salon owner pending the calculation of the total payable, as well as a further payment of €750 in compensation.
Outbreak of any notifiable disease occurring at a business premises
A number of complaints investigated by the FSPO cited policy clauses that required that the loss of income be a direct result of interruption caused by an outbreak of any notifiable disease occurring at the business premises. For example, the FSPO accepted that an insurer was entitled to refuse a claim where the insurance policy made it clear that there must be an incident of Covid-19 contracted from the premises for cover to be given. In this complaint, a dentist closed her dental practice as a result of the Covid-19 outbreak. The FSPO was satisfied that the insurer was clear in advising that for a claim to be allowed, it must be proven that a person had contracted Covid-19 at the premises and noted that the business owner had not provided such evidence when making her claim.
Outbreak of disease not listed as an "insured peril"
In other decisions in relation to business interruption insurance, an outbreak of disease was not listed as an "insured peril". This meant that those policies did not cover such an eventuality. In one such decision, the FSPO decided not to uphold a complaint because the insurance policy simply did not cover the outbreak of disease. A landlord had been affected by the outbreak when his tenant was no longer able to pay full rent. The insurer initially advised the landlord that he would be covered for loss of earnings if there had been an outbreak of the disease at the premises, resulting in its closure by the relevant authority. However, the insurer later advised that this information was incorrect for the insurance policy in question and that he would only be covered for loss of rent if there had been actual damage to the property arising from an insured peril. The FSPO accepted that there was a broad range of insured perils in the landlord's insurance policy, however the outbreak of disease was not one of them and therefore did not uphold the complaint.
Notification of claims
Two of the decisions featured in the Digest demonstrate the serious consequences that can follow for the insured because of a failure to report either a potential or an actual claim in accordance with the requirements of the policy of insurance. In one such complaint, a doctor received a personal injury claim involving a member of his staff. The injury occurred on the doctor’s premises and the doctor was the one to administer sutures to the injured staff member. The doctor failed to notify his insurer straight away as was advised in his insurance policy. The insurer was not notified until 10-months after the event had occurred. Consequently, the FSPO accepted that the insurer was entitled to refuse a claim and did not uphold this complaint.
The second decision involved an accident experienced by an employee of a construction company. Ultimately there was a clause within the insurance contract that placed the policy owner under an obligation to "immediately" give notice of any event that may give rise to a claim. With this clause in mind, the FSPO accepted that a delay of 175 days did not fall within the requirements of the claims procedure and consequently did not uphold the complaint.
Commenting on the publication of the Digest, the Ombudsman, Mr. Ger Deering, said that he believes “the decisions featured in this Digest will assist businesses, and indeed individuals, to make more informed decisions in relation to insurance and banking products and services.”
By publishing legally binding decisions and Digests of Decisions, the Ombudsman aims to enhance transparency and understanding of his powers and the services provided by the FSPO.
The sixth Digest of Decisions can be accessed here and the FSPO’s Database of Decisions, which has the full text of over 1,100 decisions, can be accessed here.
Written by Maria Curran, Hugh O'Neill & Laura Gannon