Stories
Since early April, when FBD formally notified hundreds of publicans that Covid-19 did not fall under the terms of business interruption cover, there has been heightened speculation that the Irish insurance company would face a flurry of litigation.
Its boiler plate insurance policy for pubs included business interruption cover for infectious diseases within 25 miles of a property. However, FBD argued that the lockdown was not as a result of the pandemic, but rather social distancing.
Since then, publicans have been working with industry groups, advisers and lawyers. Now, however, a pub controlled by one of the country’s leading publicans has lodged a High Court action against FBD.
Located just off Grafton Street, Lemon & Duke has fast gained a reputation as one of the city’s most popular pubs. It is run by Noel Anderson, an experienced publican and incoming chairman of the Licensed Vintners Association (LVA), and its shareholder roster includes rugby stars Rob Kearney, Jamie Heaslip, Sean O’Brien and Dave Kearney.
Anderson said it was “premature” to comment when contacted today. FBD also declined to comment. The same group of investors also own The Bridge 1859 in Ballsbridge, but this business is not taking legal action as it has different insurance arrangements.
The case is likely to be only the first of many being taken by publicans furious at the listed insurer which has declined to pay out on Covid-19 related insurance claims.
Given the star-studded shareholder, the case will be high profile, and it will be hugely significant for the hundreds of other pubs that have seen their claims rejected.
All four rugby stars have huge social media followings as well as being popular with the public. Heaslip, who has almost 280,000 Twitter followers, for example recently retweeted an article in the Irish Independent with the headline: “Publicans brand FBD claim to support customers a ‘sick joke.’”
The article by journalist Charlie Weston quoted criticism of a new advertising campaign by the insurer from the Licensed Vintners Association (LVA) and the Vintners’ Federation of Ireland (VFI). About 1,300 members of the two pub associations are estimated to be insured by FBD.
The decision by Anderson’s pub to be the first known to be suing FBD is likely to be indicative of the seriousness of the approach being taken by Irish pubs. Lemon & Duke has a solid balance sheet according to its most recently filed accounts and its investors have various business interests. With its sister pub The Bridge, it employed about 70 people prior to the crisis.
The issue has been hugely damaging publicly for FBD. It postponed a planned AGM and a decision to pay out a bumper €35 million dividend. The postponement of a vote on FBD’s dividend came as the European Insurance and Occupational Pensions Authority called on insurance and reinsurance firms to temporarily suspend dividends and share buybacks.
The company’s finances are also coming under increased scrutiny. At the turn of the year, FBD had €358 million in short term assets against €329 million in short term liabilities. However, the crisis will have derailed those numbers.
Despite the criticism, the company has refused to buckle from its position. In its letter to publicans last month, it set out its position, and why it did not believe the clause around the 25 mile radius, known as clause 1 (d), applied.
According to the letter:
“1. A requirement of cover is that any closure would have to be a closure following outbreaks of contagious or infectious disease in the premises or within 25 miles of same. That requires that the closure be caused by outbreaks of contagious or infectious disease on or within 25 miles of the premises. The closure on any view was not caused by outbreaks of disease on or within 25 miles of the premises, rather it was caused by national considerations resulting from the global pandemic including, in particular, the requirements of social distancing.”
“2. It is clear that taken as a whole, clause 1 (d) does not cover the Covid-19 pandemic and could not reasonably be interpreted to extending to such a situation. It is clear from sub clause 1 (d) that the cover provided is cover in respect of outbreaks of contagious or infectious diseases particularly to a locality. A pandemic manifestly does not fall within the clause of the scope. The WHO Covid-19 declared pandemic is by its nature, scale and consequences entirely different to localised outbreaks of contagious or infectious diseases that might reasonably have been contemplated by the parties when this policies was entered into.
“It is clear from clause 1 (d) that the agreement to indemnify in respect of the risks at 1 (d) is provided only where the business interruption loss has been caused by matter specified at 1 (d). it is quite clear having regard, inter alia, to social distancing practices (including now the restriction on more than four people gathering together outdoors) and the widespread public concern regarding the risk of infection, any business interruption loss has been caused by such social practices and public concerns and not by clause 1 (d).”
Further reading:
Rejected: The reasons given by FBD for not covering losses from “infectious and contagious diseases”
Caveat emptor: Inside the battle between industry and insurance over Covid-19 cover
