The policy is separate from the mortgage.I'm hoping that I can somehow hold onto this policy
If you continued to pay the 620pm then its worth writing a complaint in a few months time outlining that the arrears position of c.€5k was only incurred during a negotiation period and that if the new arrangement was backdated to the start of the negotiation period then the arrears position would be greatly reduced based on the below
(New Arrangement amount per month) - (Amount you paid per month) x No of Months
This would reduce your arrears amount to something like €674 - €620 X 8 months = €432.
At least the estimated amount of €432 is an amount that you can tackle over the next year or two and after that time your credit record will be restored. I wouldn't advise to leave arrears outstanding for the next 21 years as you will continue to be reminded of this issue when CCMA Arrears letters continue to be issued on a quarterly timeframe and it could restrict you in other ways in the future.
I understand that the last 8 months have been a battle and it might be best to take a break before having a go at the above buts it worth doing at some stage to give yourself final peace of mind.