More than €130m so far has been paid out to 4,371 policyholders through settled claims and interim payments, the Central Bank's system-wide examination of Business Interruption Insurance shows.
The Central's Bank Director General, Financial Conduct said the bank is monitoring closely to ensure insurers continue to meet their obligations in full where valid claims are submitted.
Derville Rowland was speaking at the Deloitte 2022 Insurance Industry Trends event today.
Ms Rowland said that where notified claims are valid, firms are fully settling them, or making interim payments while awaiting the High Court's ruling on quantum. This ruling is expected later this year.
The Central Bank started its examination by identifying about 140 firms that potentially provided business interruption insurance cover in the Irish domestic market, and 145,000 policies.
It also identified 27 firms that were actively providing business interruption insurance cover for infectious diseases across more than 200 individual policy wordings.
Each individual policy wording was then analysed, leading to the identification of 31,000 policies that were responsive to the circumstances of business interruption, or interference related to the outbreak of Covid-19.
"We directed all the firms to contact the 31,000 policyholders who, in our view, held a policy which was responsive to business interruption, along with details of how they could make a claim if they believed their business suffered an interruption or interference related to the outbreak of Covid-19 in Ireland," she said.
She explained that while a policy may be responsive, it does not necessarily result in a claim.
"There will, accordingly, be a significant difference between the number of policies we confirmed through our analysis as being technically responsive, and the number of businesses who actually proceed to claim," she said.
"Many policyholders will not make a claim as their business may not have been interrupted; they may not have been reliant on their premises to continue doing business; or they may not have suffered losses as a result of Covid-19," she said.
"For example, a proportion of responsive policies are in respect of essential retail businesses, care and health facilities or residential property owners which were not subject to closure," she added.
Ms Rowland also noted that other policyholders who have made a claim but have not yet submitted the relevant information in order for the claim to be assessed, because after the hardships of the last 18 months, the priority for some businesses is simply reopening and ensuring they get back on their feet, before dealing with issues such as insurance claims.
Other businesses may be awaiting the High Court quantum ruling before progressing their claim.
The central banker encouraged policyholders to engage with their insurer on all claims.
Earlier this year, the High Court ruled that insurer FBD should pay out claims under business interruption policies to four pubs who took a test case against the insurer.
The Central Bank's Director General also addressed the challenges facing the sector in the years ahead, including climate change and increased digitisation.
She noted that while the Irish insurance sector has experienced a relatively lower level of technological disruption, the adoption of digitalisation in insurance appears likely to grow year on year.
"Whilst those able to adapt effectively to a new digital environment may gain a competitive advantage, firms must also recognise that some prudential and consumer risks will emerge or be exacerbated by digitalisation," she stated.
