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DUBLIN — Ireland’s pubs, shut for nearly a year by the pandemic, toasted a COVID-19 court victory Friday that will require the biggest Irish insurer to pay them tens of millions of euros.
The Dublin High Court judgment was eagerly awaited in this land of 4.9 million people and more than 7,000 pubs. Most have been closed since St. Patrick’s Day — 326 days ago — to prevent virus transmission at close quarters, their staff supported by emergency welfare payments.
Insurance firm FBD, which covers 1,300 pubs, had resisted paying out on the policies’ “business interruption” clauses, arguing these were never written with a national or global pandemic in mind.
FBD nonetheless had set aside €30 million in August in anticipation of losing the case, an outcome considered likely ever since the U.K. Supreme Court ruled last month that insurers must pay such compensation to British public houses.
Publicans sued FBD for refusing to pay out on policies that, in their standard language for pubs, include “outbreaks of contagious or infectious diseases on the premises or within 25 miles.” FBD’s lawyers had argued that the COVID-19 outbreak was nationwide, not local to the pubs in question, invalidating the coverage.
Four pubs — Sean’s Bar in the midlands town of Athlone and the Dublin pubs Lemon & Duke, Leopardstown Inn and Sinnotts Bar — brought the test case after experiencing what one called “a wall of silence” from FBD.
Friday’s 214-page judgment found that the geographic scale of the pandemic didn’t override FBD’s legal obligations.
Justice Denis McDonald wrote that the spread of COVID-19 in Ireland in March 2020 had posed a “composite peril” for the pub trade that, presuming outbreaks occurred within 25 miles of each business, FBD was obliged to cover.
“It should never have come to this,” said Noel Anderson, managing director at the Lemon & Duke, a pub co-owned by retired rugby internationals Rob and Dave Kearney, Jamie Heaslip and Seán O’Brien.
Anderson said FBD adjustors had acknowledged up front in writing that their policy covered COVID-19 losses.
“Yet to have our claim settled,” he said, “we were forced to go through 10 months of deep financial uncertainty, significant additional risk in taking this action, as well as extensive stress and strain to arrive at an outcome which should have been clear from the outset.”
In a statement to the Euronext Dublin stock exchange, FBD said it accepted the verdict. It pledged to begin “interim payments” to its insured pubs but couldn’t know likely total costs until the Commercial Court rules on this on February 17.
The Irish-owned firm, founded in 1969 as an agricultural insurer called Farmer Business Developments, said it expected to suffer losses “within the range of considered financial outcomes, with FBD remaining strongly capitalized.”
FBD’s shares slid immediately after the judgment but were trading sharply higher by Friday afternoon. The firm, with 900 staff and 500,000 customers, reported net 2019 profits of €98.2 million.
The government and Central Bank of Ireland urged other pub insurers to begin paying out on their business interruption coverage.
Analysts estimate the insurance industry’s likely exposure to Irish pub policy losses to top €200 million, particularly given that closures may well last until the summer.
Ireland is in the early stages of vaccination efforts. Coverage isn’t complete yet in nursing homes and hospitals, and the government doesn’t expect all citizens to get their jabs until September.
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