Insurers fear Year 2000 bug claims

Over 50 per cent of non-life insurance companies expect they will have some exposure to claims from policyholders with Year 2000 problems, according to a survey carried out by the Department of Enterprise, Trade and Employment.

A spokesman for the Irish Insurance Federation expressed surprise at the findings and said it was the federation's view that Year 2000 problems were not covered by commercial insurance policies. "Insurance covers the unpredictable, not the inevitable," said Mr Michael Horan, non-life insurance manager with the federation. He expected many firms would introduce special exclusion clauses in commercial insurance contracts from later this year, "though as I say, I don't think they are really necessary".

The introduction of exclusion clauses would serve to focus people's minds on the problem, he added. He said the federation had been involved in raising members' awareness of the issue and through them, policyholders' awareness.

A spokesman for the Department said "only time would tell" whether insurance contracts covered Year 2000 problems. He was aware of the legal arguments backing the federation's claims, but believed the matter would probably have to be tested in court.

A questionnaire was sent to all Irish authorised insurance companies concerning their computer system compliance for 2000, and seeking an assessment of additional insurance risk which may arise as a result of their policyholders' experiencing Year 2000 problems.

With non-life companies, 55 out of 83 companies returned the questionnaire; 54 per cent expected their systems to be compliant by 2000, and 38 per cent were unsure as to when they would achieve compliance. Some smaller companies felt the problem did not apply to them.

In regard to the risk of exposure, 29 of the 55 respondents felt they would experience some exposure to Year 2000 claims.

With life companies, the majority were, or expected to be compliant and none felt it would be exposed to increased risk.

Mr Horan said the survey results were not an accurate picture. His federation had 24 non-life members who between them controlled 98 per cent of the market, "and our members are very much on the ball as far as Year 2000 is concerned".

A more accurate picture, based on market share, would show that most insurance business was with companies which were fully prepared for Year 2000, he said.

The Department of Enterprise, Trade and Employment is to contact companies which are uncertain about compliance, as part of the ongoing insurance supervision process.