The issue has been raised by many French companies in great difficulties during the lockdown.
The media questioned the insurance companies, but they all recalled the fundamental principles of insurance: when a claim affects all the insured, the whole population, it is called a systemic claim, and it is thus uninsurable.
The website of the French Federation of Insurance Companies [https://www.ffa-assurance.fr/infos-assures/coronavirus-covid-19-et-assurance] states the following:
"Complementary health insurance contracts and provident contracts can be used to compensate policyholders in case of an epidemic like the coronavirus COVID-19". Similarly, travel cancellation or medical repatriation can be covered according to the contracts taken out.
On the other hand, almost all contracts covering companies (operating losses, supply chain disruption, cancellation of events, failure to deliver, etc.) exclude the event of an epidemic. Indeed, depending on its duration and scale, an epidemic can affect all sectors and have an impact on overall economic activity, making its economic consequences uninsurable.
In all cases, it is advisable to refer to your contract and to contact your insurer".
The French public authorities are trying to put pressure on the insurance companies so that cover can be provided and future mechanisms for this type of crisis can be considered.
On 22 June 2020, the Autorité de contrôle prudentiel et de résolution (ACPR), which supervises both banking and insurance, drew up an inventory of the "business interruption" guarantee. It estimated that only 3% of policyholders have contracts that explicitly cover the pandemic, while this coverage is excluded in 93% of cases. On the other hand, for 4% of policyholders, the contracts contain clauses that "do not allow to conclude with certainty that there is no cover". Only a judge's interpretation can remove the uncertainty "if the insurers do not interpret the contract in favour of the insured". For the future, the regulator "invites professionals to review the wording of all ambiguous contractual clauses and to clearly inform policyholders of the exact extent of their coverage".
The BI guarantee is almost always an ancillary guarantee to a main guarantee. It complements the "fire", "water damage", "natural disaster" or other coverages.
In other words, almost all insurance policies cover BI only when it is the direct consequence of material damage caused by one of the events provided in the policy.
In the case of BI, the principle is that there is no guarantee without material damage.
However, some insurers might provide compensation in case of administrative closure.
Yes - see following column
A provisional decision issued by the President of the Paris Commercial Court on 22 May 2020 (RG n°2020017022), which ordered AXA to pay a provisional amount of €45.000 to a Parisian restaurateur that faced BI, pending a judgment on the merits. A new debate will however take place on the merits of the case before the Paris Commercial Court, which will not be bound by the provisional judgment. Moreover, AXA has lodged an appeal against the provisional decision of 22 May 2020.
Also, Axa France is currently being sued before the Commercial Court of Bordeaux by another restaurateur. The President of the Court issued its provisional judgment on 23 June, 2020 in which he considers that the interpretation of the insurance contract in dispute falls under the scope of the judge competent to rule on the merits of the case, and thus rejected the restaurateur’s claim for a provision estimated at €30.000. However, the President ordered a financial technical appraisal, as requested by the restaurateur, in view of assessing the amount of the operating losses allegedly incurred by him.
Axa France is also currently being sued before the Commercial Court of Lyon. Although it did not rule on this dispute as it considered itself incompetent to interpret the contract, it nevertheless announced that it would refer the case to be ruled on the merits on 1 July 2020. To date, the case is still pending.
Other insurers are also being sued for compensation. On 18 June, the Commercial Court of Annecy ruled in a case opposing the insurer SA Assurances du Crédit Mutuel and a restaurateur.
Following the restaurateur's insurance claim, the insurer had indicated that damage caused by a micro-organism such as COVID-19 was excluded from cover and that, exceptionally, it had decided to pay its policyholders a reminder premium which, in the case of the restaurateur was €20.000.
The restaurateur had refused the proposal and asked the insurer to implement the coverage, challenging its interpretation of the microorganism nature of the COVID-19 virus.
The President of the Court issued its provisional judgment in which he noted that there appeared to be a serious challenge to the scope of the clause in question, and therefore to the grounds for the restaurateur's claim, and that he did not have the power to settle this dispute.
Concerning hoteliers, a recent decision has been issued on July 17, 2020 by the President of the Commercial Court of Nanterre, against the insurer Albingia. Five hotels have engaged an action against Albingia, in order to obtain a provisional payment of
€450.000 aimed at covering two months of operating losses related to the Covid-19 epidemic.
The President considered that the operating losses suffered by the hotel companies were covered by the insurance policies taken out with Albingia.
As the total amount of the losses has still not been quantified and pending the financial technical appraisal, the insurer has been ordered to pay a provisional amount of €450.000 to its clients.
French Federation of Insurance Companies website: