Posted: June 29th, 2020
In France the proprietor of a chain of Paris-based restaurants has successfully concluded business interruption compensation settlements with insurer Axa.
The claims were in relation the closure of business and resulting loss of earnings caused by the legally enforced lockdown, imposed due to the COVID-19 pandemic by the French government.
The restaurateur, Stephane Manigold, released a public statement to confirm that his talks came to a satisfactory conclusion with Axa insurance. In May he had agreed a compensation settlement linked to another of his restaurants. It is hoped that these victories will now be used as a precedent when considering the compensation claims of small and large businesses who have insurance contracts that feature ambiguous business interruption clauses.
Manigold, who operates four restaurants in the Paris region, initiated the compensation claim against Axa as the insurer was refusing to pay out on a business-interruption policy. The compensation figure was calculated at €45,000. This came after all of his restaurants were closed due to the government imposed two-month lockdown to fight the COVID-19 pandemic in France.
The more recent settlement was to make up for the loss of earning caused by business interruption at Manigold’s remaining restaurants. The compensation figure agreed was not made public. In France Axa is not the only insurer facing claims such as this. French financial watchdog ACPR conducted a survey that confirmed around 3% of business policies would result in clear-cut business-interruption payouts linked to the pandemic. Along with this it was calculated that another 4% of potential compensation claims would be less easy to resolve.
The consequences of Manigold’s compensation settlement have already been witnessed. Currently Axa is conducting mediation with another 600 restaurants in relation to business loss compensation claims.
Axa has stated that it currently manages 20,000 insurance policies in the hospitality sector in France and that some 1,700 of these have business interruption clauses. These policies are now under review. Most of the other 18,300 insurance contracts do not include business-interruption clauses.
There are a growing number of cases in the United Kingdom as well and Huw Evans, director-general of the Association of British Insurers, said: “Business interruption policies are property-based policies. The vast majority of them provide cover against flood and fire and other physical damage to a building.”
These settlement should be of huge interest to Irish-based firms who have an insurance contract that features a business interruptions clause. The French legal action may be seen as a precedent for compensation claims around the world.
Categories: Compensation News