The Dublin High Court handed down a landmark decision in favour of policyholders on February 5, 2021, in four test cases brought by publicans against FBD Insurance (“FBD”), providing clarity to policyholders seeking indemnity for business interruption as a result of the Covid-19 pandemic. FBD announced that it won’t be appealing the decision, and that the judgment “provided clarity to all parties concerned”.

A few weeks after the UK Supreme Court issued its final deci­sion in the FCA test case, the Irish High Court ruled in favour of poli­cy­hol­ders. The FBD insu­rance deci­sion will be a miles­tone in the Irish busi­ness inter­rup­tion insu­rance land­scape. Note­wor­thy point, the Irish High Court delayed its deci­sion in order to consi­der the par­ties’ sub­mis­sions on the poten­tial impact of the FCA test case. This deci­sion is quite dif­ferent from the FCA’s Test Case though, as unlike the UK wat­ch­dog, the Cen­tral Bank of Ire­land did not take the ini­tia­tive to bring such a test case to Court, cer­tain­ly due to sta­tu­to­ry res­tric­tions, and let the mar­ket liti­gate the case. Des­pite its absence in the test case pro­cee­dings, the Cen­tral Bank is appa­rent­ly willing to super­vise this issue, as it announ­ced that it “wel­comes the judg­ment of the High Court” and that it will be “clo­se­ly exa­mi­ning the poten­tial impact of this judg­ment for cus­to­mers in the context of its sus­tai­ned and ongoing enga­ge­ment with insu­rers”. The CBI also issued a super­vi­so­ry fra­me­work for insu­rers last August, set­ting out its expec­ta­tions on how insu­rers should assess Busi­ness Inter­rup­tion claims and how sys­te­mic issues of cus­to­mer harm should be iden­ti­fied and addressed.


The Irish test case invol­ved four pubs that held insu­rance poli­cies with FBD. The insu­rer refu­sed to indem­ni­fy the publi­cans for losses ari­sing from dis­rup­tion cau­sed to their busi­nesses by Covid-19, sta­ting that their poli­cies did not cover these types of claims.

Indeed, FBD’s poli­cies contai­ned a clause confir­ming that pubs would be indem­ni­fied if they were clo­sed by order of the govern­ment autho­ri­ty in rela­tion to “out­breaks of conta­gious or infec­tious diseases on the pre­mises or within 25 miles of same”. The publi­cans argued that :

- the fai­lure to cover their claims was a breach of contract ;

- and that under their poli­cies of insu­rance with FBD, they were entit­led to have their conse­quen­tial losses cove­red by an insu­rable risk.

FBD contes­ted this, and argued that the impo­sed clo­sure could not be said to have been cau­sa­ti­ve­ly lin­ked to an out­break of Covid-19 which occur­red within the 25-mile radius sur­roun­ding the publi­can’s res­pec­tive premises.

Howe­ver, the High Court dis­mis­sed FBD’s argu­ments and ruled in favour of the pub owners, sta­ting that the BII poli­cies respon­ded where the clo­sure was cau­sed by natio­nal disease out­break, as long as :

  • there was an out­break within the 25 mile radius of the business,
  • the out­break was one of the causes of the closure.

In its ope­ning sta­te­ment, the High Court sta­ted that “It is hoped that the ulti­mate out­come of these cases will assist in the reso­lu­tion of a large num­ber of simi­lar claims”, with the hope that this deci­sion will ensure that simi­lar busi­ness inter­rup­tion claims are resol­ved without recourse to litigation.

What’s next ?

FBD said that it was com­mit­ted to paying valid BII claims and will endea­vour to pro­cess claims as qui­ck­ly as pos­sible and in accor­dance with the court’s judg­ment. It also indi­ca­ted that it will make inter­im pay­ments to affec­ted poli­cy­hol­ders while wai­ting final cla­ri­ty from the court on issues of quan­tum. Indeed, test actions to deter­mine how much FBD must pay out will be heard in the High Court after April.

As the FCA’s test case, the Irish test case jud­ge­ment is posi­tive news for many cus­to­mers but - as for UK bro­kers – it will create an expo­sure for insu­rance inter­me­dia­ries, as explai­ned in an article writ­ten by Richard Webb.

Sources : – takeaways-from-the-fbd-insurance-decision