It is a court decision that will be read feverishly by all insurers and traders forced to lower the curtain for more than two months to prevent the spread of the epidemic. Friday, the Paris Commercial Court ruled in favor of the company Maison Rostang which had decided to assign AXA for interim measures to obtain from the insurer that it cover it against losses suffered by its restaurants since the start of the crisis.
“It is a collective victory. Tomorrow, the lives of many business leaders will change ”, said Friday, the strangled path, Stéphane Manigold, the entrepreneur behind the lawsuits, outside the door of one of his four Parisian restaurants.
The administrative closure in question
“Get up, read your contracts [d’assurance] “, he launched to the address of all restaurateurs. And to sharply criticize the behavior of his AXA insurer. “ What I expect from my insurer is that he lends me an umbrella, it is not that he hides it from me ”.
For weeks, the restaurateur has been hammering in the media that his insurance contract called “operating losses” should play. These insurances are designed to compensate companies suffering from a drop in turnover because they are forced to stop or to idle.
They often intervene in the event of material damage such as a fire, but can in certain cases operate “without damage”. This is precisely the case with Maison Rostang’s contract, which provided for an extension in the event of administrative closure “Imposed by the police or health and safety services”.
The debate on the pandemic dismissed
For AXA, the idea of this extension was to cover the case where the restaurant would have been forced, by order of a prefect, to close for failing to comply with health and safety regulations. Nothing to do with the containment that has been imposed by the government on most businesses since mid-March. According to AXA, this did not prevent the restaurant from maintaining its activity by making deliveries.
Like most insurers, AXA also argues that, except in special cases, insurance contracts cannot operate because of the pandemic which had not been anticipated by anyone. Insurers argue that since insurance premiums were not calculated in anticipation of this risk, compensation for operating losses suffered by companies since the start of the crisis would bring the sector to its knees financially.
The magistrates did not hear it that way. ” AXA France IARD explains the uninsurable nature of pandemic risk both economically and legally. This debate, interesting as it may be and on which opinions differ, does not concern us ”, can we read in the decision. ” It was up to [donc] AXA conventionally exclude this risk. This pandemic risk is not excluded from the contract signed between the parties ”.
The judges therefore order AXA to pay “As a reserve” 45,000 euros to Maison Rostang and 5,000 euros to compensate for the lawyers’ fees incurred by the company in the context of the procedure. The magistrates also appointed a judicial expert to assess the amount of damages made.
“This decision remains provisional”, said AXA France on Friday evening, adding that the group would appeal. “Only a judgment that cuts through the substantive debate can lead to a peaceful interpretation of the contract ” The insurer also insists that the decision “Concerns a specific contract signed by a few hundred catering professionals with a brokerage firm”.
This decision which should be the subject of legal debates for several months, even several years, will relaunch the debate on the assumption of operating losses which has torn up the insurers between them. She could be emulated. “For the moment, insurers are not beset with litigation to our knowledge but this decision risks opening a breach”, explains Martin Le Touzé, associate lawyer at Herbert Smith Freehills.
The fact remains that loss-of-damage operating loss insurance contracts of the type of Maison Rostang are deemed to be fairly uncommon. The insurance gendarme must quickly take stock of this issue. Failing to exercise their operating loss insurance contracts, some insurers such as Crédit Mutuel have announced exceptional lump sum compensation for companies. What perhaps appease the discontent of some entrepreneurs.