With many pubs forced to close their doors due to Covid-19, it seems that some insurance companies are refusing to lend their support during this unprecedented crisis. The Licensed Vintners Association (LVA) and the Vintners Federation of Ireland (VFI) have criticised insurers who are refusing to honour the ‘Business Interruption’ cover for pubs that have been forced to close due to Covid-19. The representative bodies have stated that they have received confirmation from Allianz and FBD, two of the largest providers of business interruption cover to pubs, that they will not be providing this cover. Many publicans had intended to use these payments to provide payment to their staff during the closure period, thereby reducing the burden on the social welfare system and the Exchequer.

Following confirmation from the two insurers that they will not be honouring these policies, the LVA and the VFI are calling on the Government to immediately engage with the Irish insurance industry on this matter. “This is a disgraceful decision by the two insurance providers,” said Donall O’Keeffe, Chief Executive of the LVA. “At a time of national crisis, with the pub sector on its knees, these insurers have spurned us in our time of need and are refusing to play their part in this emergency situation.

“Many of our members had hoped to use the payments they would receive under their business interruption cover to continue to pay some or all of their staff. During this critical time that would not only help thousands of pub employees and their families, but it would also be in the national interest as it will reduce the demand for social welfare payments.

“Given the tremendous strain that the Exchequer finances will be coming under this seems like the insurers are turning their backs on not just the pub sector, but the entire State,” he said.

Padraig Cribben, VFI Chief Executive, stated: “This situation surely must constitute the very definition of ‘business interruption’. Yet the insurers seem to be hiding between two arguments at present. Firstly that the decision taken by the pubs to close was not mandated by law and secondly that this crisis represents a ‘force majeure’ event.

“Taking all these factors into consideration, we have now asked the Government to take immediate action. We would like the Government to engage with the insurance providers on this matter and to publicly outline their perspective on the role of insurers in supporting businesses and their staff.  We will also be seeking the Government request to close the pubs to be officially mandated in law.

“We will take all necessary actions to push the insurance providers on this matter and will not rest until they do right by the pub sector and indeed the whole country on this issue,” he added.

Support has been forthcoming from other areas, including the banking sector. AIB and Bank of Ireland have announced measures to help pubs in the wake of the coronavirus crisis and will offer members, on a case by case basis, access to emergency working capital facilities and an initial three month repayment holiday. Sky has also announced that it will not be charging for its Sky Sports service until a live sport schedule returns. Representative bodies have stated that they will also continue to engage with other companies and businesses on behalf of their members to bring forward measures that will help pubs in light of the crisis.

Commenting on the virus, Padraig Cribben said that we have entered a period of prolonged uncertainty which will have profound consequences for the hospitality sector. “Since the enforced shutdown we have worked with the banks, TV subscription services, drink suppliers and other suppliers to come to an agreement about forbearance and payment suspension for the coming months. The clear majority, understanding the crisis pubs are facing, have made meaningful efforts to accommodate our members.

“We need landlords to exercise the same understanding because there is little point in demanding money that isn’t there. We need to work together to get through the current crisis. The relationships we strengthen now through mutually acceptable agreements will make the return to normal trading easier for all.”

Meanwhile, the Restaurants Association of Ireland has stated that new measures announced by Revenue don’t go a fraction of the way towards helping businesses, especially SMEs in the tourism and hospitality sector. It has been reported that the RAI is also engaging with legal counsel as the group’s members prepare to take action against insurance companies that are refusing to pay out for business disruption caused by Covid-19.

Adrian Cummins, CEO of the Restaurants Association of Ireland, stated: “Currently, thousands of workers are being laid off as we speak. A specific aid package for the tourism and hospitality sector need to be in place by Monday morning.” The Restaurant Association’s emergency demands are:

  • Immediate reduction of the VAT rate to 9% for tourism and hospitality businesses for a minimum period of six months
  • Irish banks must defer loan repayments for at least six months
  • Revenue must introduce a moratorium on VAT payments
  • Employer PRSI must be halved to support employers