Pandemic business interruption coverage: insurance companies in panic? 

Insurance companies in panic about pandemic business interruption coverage

A restaurateur is preparing to summon his insurer, AXA, before the Paris Commercial Court, believing that AXA is evading his contractual obligations by refusing to compensate for the operating losses caused by the closure of his establishments imposed by the health crisis.

"Axa refuses to execute the contractual guarantee covering compensation for operating losses while no exclusion applies", Stéphane Manigold, head of four Parisian restaurants employing 52 people, said to AFP information agency.

According to his lawyer, Maître Anaïs Sauvagnac, the insurer "must guarantee the operating loss" of the establishments "following the closure ordered by the decree of March 14, 2020, taken by the Minister of Health" because of the epidemic of Covid-19.

The insurance broker Satec, with whom the insurance contracts for Stéphane Manigold's restaurants were taken out, agrees with the insured, "having an objective interpretation and in good faith of the clauses".
In fact, in an email to its customers, the Satec group states that if "in general, operating losses are not covered following the occurrence of a virus like Covid- 19", certain contracts compensate the insured in the event of "administrative closure imposed by the police, health or safety services". Stressing to have "not observed exclusions specifically targeting epidemics and / or pandemics in the general conditions" of these contracts, Satec asks AXA to review its assessment of the situation of the insured.

On the other hand, other insurers in France confirm guarantees with an extension for operating losses in the event of administrative closure. In a press release dated April 14, the Covéa group thus indicates that it has mobilized € 300 million for the contractual guarantees in response to the pandemic crisis. "Contractual guarantees are fully applicable, such as the compensation for work stoppages and the coverage of operating losses in the event of a pandemic subscribed by restaurateurs covered by the decree of March 15", specifies the mutual insurance group which brings together the three brands Maaf, MMA and GMF.

The subject will concern many European insurers, unless the shutdown period probably will be gradually cancelled in many countries in May already. Some German insurers already choosed a different approach: they simply offer a global compensation of 15% on balance of all demands, much critized by German lawyers.

In Switzerland, the Ombudsman of Insurance ordered a neutral expertise from a university professor and he announced already that he will intervene at the insurance companies refusing coverage if the expertise will be in favour of the catering business. 

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