ELEVEN publicans across Cork have decided in recent weeks not to reopen when restrictions on pubs are lifted.
That is according to chairman of the Cork branch of the Vintners’ Federation of Ireland, Michael O’Donovan, of the Castle Inn in Cork city. He revealed the numbers following Friday’s landmark Commercial Court decision that four pub-owners who held public house insurance policies are entitled to be compensated by FBD for the disruption their businesses have suffered due to the Covid-19 pandemic. It paves the way for more than 1,000 other publicans across the country who held the same policy.
Mr O’Donovan said: “For a lot of businesses, it will be a lifeline. Since Christmas and into early January, I know of 11 pubs in Cork that are not opening again.”
He is also aware of four leaseholders of pubs in Cork city who have opted not to continue their leases. However, Mr O’Donovan said: “I would think they will still remain as bars.”
Pubs have been closed under the current lockdown since 3pm on Christmas Eve.
“Even when things do get back to normal it will take a lot of work to get the public’s confidence back,” Mr O’Donovan said.
In the first day our series on the legal implications of the Covid-19 pandemic, Ann Murphy looks at the impact of Friday’s ruling regarding business interruption insurance.
SEVERAL Cork publicans are among more than 1,000 across the country who are being written to by FBD this week to confirm they are covered for Covid-related business interruption.
The publicans being written to are holders of FBD’s Public House Insurance policy.
The measure follows Friday’s judgement in the Commercial Court that four pub owners who held the Public House Insurance policy are entitled to be compensated by FBD for the disruption their businesses have suffered due to the Covid-19 pandemic restrictions.
Owner of the Castle Inn in Cork city, Michael O’Donovan, is chairman of the Cork branch of the Vintners Federation of Ireland. He said he has been receiving calls throughout the weekend from publicans following Friday’s ruling.
He said the landmark ruling came after 10 months of waiting by publicans.
He continued: “The judgment runs to 214 pages so it will take time to decipher. Nationally, we are waiting for expert opinion.”
He added: “It is back in court again in two weeks to decide the quantum. While the initial step is very good, there is a bit of a road to go yet. There have been talks of interim payments so hopefully that will be done.”
He pointed out that even though pubs remain closed, there are many costs still to be met by publicans.
On FBD’s website, the company said: “The judgment handed down on February 5 has clarified that cover for business interruption claims relating to Covid-19 does apply under the FBD Public House Insurance policy only. We will write to all FBD Public House Insurance policyholders during the week of February 8 to update customers of the position and inform them of the claims process.”
The company has also pledged to process claims as quickly as possible following the ruling.
And it says: “We will now consider the effects of the judgment with our reinsurers and will revert to the market in due course on the estimated net cost of Covid-19 related business interruption claims to the Company.
“We expect the cost to be well within the range of considered financial outcomes, with FBD remaining strongly capitalised. FBD believes that the court process was the fairest way to reach a resolution in this matter and tried to ensure that proceedings were as quick and efficient as possible for all concerned.
“We have had the privilege of supporting individuals, farms, and businesses in Ireland for over 50 years and our commitment to our customers remains as strong as ever.”
Under the policy, losses are covered where a premises is closed under the orders of a local or government authority in the event of “outbreaks of contagious or infectious diseases on the premises or within 25 miles of the same”.
According to Friday’s court decision, cover is not lost if closure is prompted by nationwide outbreaks of a disease, provided there is an outbreak within a 25-mile radius of the premises and that it is one of the causes of the closure.
Mr O’Donovan said although several Cork publicans hold the policy which was the subject of the ruling, there are others who will be watching to see if their insurers will follow suit.
And he revealed that during the Christmas and New Year period, decisions were taken by at least 11 publicans across Cork county not to reopen again, when restrictions are lifted. They are mainly in rural areas.
A further four publicans in Cork city, who are leaseholders, have also decided to give up their leases. However, Mr O’Donovan said he believes that the premises involved will remain as bars.
Independent Cork County councillor, and Bantry publican, Danny Collins says he will be seeking legal advice today from his solicitor to see where he stands. He is not insured by FBD but is hoping that Friday’s ruling will lead other companies down the same road.
He said: “I take my hat off to those four publicans who took the case.”
He has contacted his insurance broker who told him that he is currently examining on how to proceed in light of Friday’s ruling. He had been told prior to Friday that he would not be covered for business interruption. He says he is paying €380 a month on his insurance policy.
VFI chief executive Padraig Cribben said: “This High Court decision is the first good news the 1,100 publicans who are FBD customers have received since the crisis began last March. Publicans took out business interruption cover with FBD in good faith and the decision by the insurance company to challenge that cover caused huge distress for our members at a time when they were at their most vulnerable.”
He continued: “While the full detail of the court’s 214-page decision is still being analysed, we know that publicans with these policies will now be compensated for the losses incurred by the pandemic. A quantum hearing where the amount of compensation will be decided will be held in due course. It now follows that other insurance companies should review their business interruption claims and begin a process of working with publicans to ensure adequate compensation is provided for the interruption of their businesses.”
Mr O’Donovan echoes that view, saying: “This decision was only made on Friday so hopefully, in the coming weeks, other companies will follow suit. In the next month, we will have a lot more clarity.”
He urged publicans with the FBD policy which was the subject of Friday’s ruling to contact the company and lodge their claim.
He also stressed the importance of having a loss adjustor, adding that the VFI has one on board to help its members.
“For a lot of businesses, it will be a lifeline.”
Friday’s decision was also welcomed by the Minister of State with responsibility for Financial Services, Credit Unions, and Insurance, Seán Fleming.
“The findings are lengthy, the matter is complex and will need to be considered in detail,” he said following Friday’s judgement. “The Government’s consistent view has been insurers should engage with impacted businesses honestly, fairly, and professionally to honour the terms of the policy cover, in line with the Central Bank’s Consumer Protection Code.
“Separately, the Central Bank’s Business Interruption Insurance Supervisory Framework sets out its expectations of insurance firms in handling Covid-19 related business interruption insurance claims.”
He stressed the importance of all insurers who offer business interruption insurance in carefully assessing the ruling “and how it may impact upon their policies”.
The Central Bank welcomed the court decision, saying: “We will be closely examining the potential impact of this judgement for customers in the context of our sustained and ongoing engagement with relevant firms.”
During the weekend, the Restaurants Association of Ireland confirmed that its legal advisers have reviewed hundreds of policies of its members following Friday’s ruling.
Chief executive of the RAI, Adrian Cummins, said the association had written to 12 insurance firms “on behalf of members seeking immediate interim business interruption payments”.
More than 20 restaurants started legal action in the High Court last year against their insurers, having made claims for business interruption due to the pandemic.
The Irish Hotels Federation also welcomed the court ruling.