The business interruption claims controversy risks becoming the tracker mortgage scandal of the insurance industry, the Dáil has been warned.
Sinn Féin finance spokesman Pearse Doherty made the claim as he renewed a call for the Central Bank to follow the UK example and take action over insurance companies' refusal to pay business interruption claims.
There were testy exchanges when Tánaiste and Minister for Enterprise Leo Varadkar insisted the Government could not direct the Central Bank, an independent regulator, to intervene.
The Tánaiste accused the Sinn Féin TD of being disingenuous and attempting to mislead businesses into believing the Government could direct the regulatory authority to act.
“I know Central Bank is aware of this issue” and will make a determination independently, he said.
But Mr Doherty told Mr Varadkar: "Don't you wriggle out of the situation". The Donegal TD said he had privately met the Central Bank and gave them documentation and claimed Mr Varadkar "washed your hands" of the issue last year.
The row follows the successful High Court action taken by four pubs against FBD insurance for its refusal to pay claims for business interruption following their closure during the Covid-19 pandemic.
Mr Varadkar said the High Court decision was very significant and there was still a decision to be made later this month “on the quantum indications reports”.
The case “could have implications for other small businesses and other companies that have similar policies with this insurer, or others.
Mr Doherty said he had repeatedly called in the Dáil last year for the Central Bank to take action and for the Government to support that call. “But the Central Bank took no action and your Government took no action at that time.”
And he said that was the pubs were forced to take a court case. There were thousands of other businesses with different policies and the only option for them is either for the Central Bank to intervene or “there is going to be a wave of litigation at a cost that is too much for so many small businesses”.
Mr Doherty said “business interruption risks becoming the tracker mortgage scandal of the insurance industry”, when thousands of home owners were improperly removed from their tracker mortgages.
Mr Doherty said last year the British financial regulator, the Financial Conduct Authority gathered a sample of 21 different types of insurance policy from businesses and took a court case. They did this in the public interest he said, won their case last month and as a result, “thousands of businesses will receive a financial lifeline and so many of them that are struggling at the time”.
He said a number of insurance companies including AIG, Aviva and Allianz "are still dragging their heels and refusing to pay even interim payments to businesses".
But rounding on the Sinn Féin TD, Mr Varadkar said that in calling for the Government to direct the Central Bank to intervene “you don’t say those kinds of things because you’re stupid. You’re not stupid and you say those things because you hope other people are stupid, and you believe that they may think that the Government has the power of intervention.”
Mr Doherty said that was a “shocking answer”. He said small businesses did not have the resources to fight the issue through the courts and told Mr Varadkar that “instead of criticising me and what I’m trying to do” he could support those businesses “and support me in my call”.
Reiterating that he could not direct the Central Bank to intervene, Mr Varadkar said the regulator was aware of the issue long before Mr Doherty raised it.
But he said the High Court case was an important test case. He paid tribute to those who took the case and said it was good that FBD said they would cover the cost whatever the outcome. He added: “And we now have case law” in this area.
