French Court Orders AXA to Pay Restaurant’s COVID-19 Business Interruption Losses; AXA Vows to Appeal

By Elizabeth Pineau and | May 22, 2020

A Paris court ruled that insurer AXA must pay a restaurant owner two months’ worth of coronavirus-related revenue losses, the restaurateur’s lawyer said on Friday, potentially opening the door to a wave of similar litigation.

The ruling will be of interest to restaurants, cafes and nightclubs in Britain and the United States which are also threatening legal action against insurers who have not paid out on business interruption policies.

Axa said it would appeal.

The case was brought by Stephane Manigold, who owns four Paris restaurants. He filed a lawsuit demanding AXA cover his operating losses after a government order in mid-March to close bars and restaurants to slow the spread of the coronavirus.

When he learned of Friday’s verdict at his office, Manigold high-fived a colleague and his supporters applauded. “This is a collective victory,” he told Reuters. He later cried as he spoke to reporters in front of one of his shuttered restaurants.

European Insurers’ Coronavirus BI Claims Likely to Be Limited: Moody’s, ABI

The court said 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,” Manigold’s lawyer, Anais Sauvagnac, said.

AXA said a small number of its clients in the French hospitality sector were covered for COVID 19-related losses because they bought a special policy. But most clients in the sector did not have that policy and did not quality for compensation, AXA said.

If all COVID 19-related losses were deemed covered by insurance, French insurers would have to compensate 20 billion euros ($21.8 billion) per month, industry estimates show.

Whatever the outcome in AXA’s court case, prolonged legal wrangling might prompt the French insurance regulator to insist insurers put aside additional reserves to offset legal risk, said Benjamin Serra of Moody’s ratings agency.

This, Serra said, “would impact insurers’ profitability this year.”

($1 = 0.9172 euro) (Reporting by Elizabeth Pineau and Maya Nikolaeva in Paris; writing by Maya Nikolaeva and Geert De Clercq; editing by Kirsten Donovan and Matthew Lewis)

Photograph: A man walks through empty streets near the Galeries Lafayette department store, in Paris, on Friday, March 20, 2020. Photo credit: AP Photo/Thibault Camus.

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Latest Comments

  • May 26, 2020 at 7:19 pm
    CA RM says:
    it seems AXA (and all of its peers) don't want AXA to fight a loosing battle, and if France's legal system has similarity to the USA's, the insurance executives won't want bad... read more
  • May 26, 2020 at 3:28 pm
    Andrew says:
    Hi Steven, This article may be of help with what he was alluding to.... https://www.insuranceage.co.uk/insurer/7513521/axa-to-pay-french-covid-19-bi-claims-after-court-ruling-... read more
  • May 26, 2020 at 9:43 am
    Steven Jackson says:
    insexpert: may I ask the source of your more detailed knowledge? This isn't the only "piège à clics" (following CELF guidance) I have come across, and none have mentioned th... read more

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