AXA Agrees to Cover Restaurant Losses From Covid Lockdown
AXA SA has agreed to cover losses sustained by several hundred restaurants during the coronavirus lockdown after the French insurer lost a lawsuit brought by a policyholder.
A small number of policies sold to restaurants to insure against disruption of their business were “not 100% clear in their language” on coverage, Chief Executive Officer Thomas Buberl said at a shareholders’ meeting on Tuesday. “Very few of them were insured against the risk of operating loss without damage,” he said. For these restaurants, AXA has paid compensation that’s “outside of their contract.”
Restaurant owner Stephane Manigold sued AXA, seeking compensation for operating losses following a government order to close bars and eateries. A Paris court ruled in late May that the insurer had to cover two months of lost revenue. AXA said it would appeal the decision, but quickly settled with Manigold.
AXA’s decision to cover a share of the restaurants’ losses highlights the uncertainty surrounding the amount insurers across Europe will have to pay out on claims related to revenue lost during the lockdown. The U.K. Financial Conduct Authority has brought a test case to London’s High Court seeking clarity on the limits of business-interruption insurance.
Hiscox Ltd. and other insurers indicated in the FCA case that they would argue against paying out fully on such claims, saying that shops in Sweden lost money even without a strict lockdown. Sweden, in contrast to most other countries in Europe, enforced softer lockdown measures, leading to one of the highest death rates in the world relative to population.
©2020 Bloomberg L.P.