French insurer ordered to pay Covid-19 revenue losses
The French court said that the administrative decision to close the restaurant qualified for insurance cover as a business interruption loss.
Anais Sauvagnac, solicitor for the restaurateur Stephane Manigold, has stated that the case could potentially open the door to a wave of similar litigation there.
The French court ruling will be of particular interest to pubs, restaurants, cafés and nightclubs currently taking insurers to court over non-payment of business interruption policies specifically mentioning Covid-19.
Here, the owners of Sinnot’s Bar, The Leopardstown Inn and Lemon & Duke as well as Sean’s Bar in Athlone have taken action individually to have their losses, suffered as a result of the closure of their outlets due to Covid-19, indemnified by their insurance company.
Following the judgement of Paris, AXA has stated that it will appeal the decision, according to a Reuters report.
Stephane Manigold, who owns four restaurants in Paris, brought the case against AXA, by filing a lawsuit demanding that the insurance company cover his operating losses following a French government order to close bars and restaurants back in mid-March to slow the spread of the Coronavirus.
“This is a collective victory,” he told reporters following the decision.
According to Reuters, the court said that the administrative decision to close the restaurant qualified for insurance cover as a business interruption loss.
“This means that all companies with the same clause can appeal to their insurers,” claimed Anais Sauvagnac.
But AXA has stated that a small number of its clients in the French hospitality sector were covered for Covid-19-related losses because they bought a special policy, adding that most clients in the sector did not have that policy and did not quality for compensation.
According to industry estimates, if all Covid-19-related losses were deemed covered by insurance, French insurers would have to pay out €20 billion per month.
But insurers elsewhere seem likely to face only moderate Business Interruption claims as a result of the Coronavirus outbreak because Pandemic-related claims are excluded from most Business Interruption policies in countries such as the UK, France and Germany, said Moody’s Investors Service in a sectoral comment.
According to a report in the Insurance Journal, “Moody’s explained that business interruption insurance typically covers firms only against closure due to physical damage. Indeed, the Association of British Insurers (ABI) on March 17 said that ‘the vast majority’ of businesses will not have purchased policies that compensate them for such forced closure’”.
