French Insurance Group Axa has said it would look to pay claims to the country’s restaurant owners which had taken business interruption policies similar to those which saw the firm lose a key court case, last week.
The firm’s CEO has told Reuters the insurer would meet the bulk of claims from some restaurant owners after a Paris court ruled last week the French insurer should pay one owner two-months’ worth of coronavirus-related revenue losses.
The ruling on a disputed contract was seen as opening the door to a wave of similar litigation.
Axa has said it would appeal the decision, however, Chief Executive Thomas Buberl said AXA planned to compensate business interruption losses to the majority of restaurant owners whose contracts were similar to the one studied by the court.
“These contracts represent less than 10% out of total contracts with restaurant owners and I am confident that we will find a solution,” he said. “We want to compensate a substantial part of these contracts, we want to do it quickly”.
The original case was brought by Stephane Manigold, owner of 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.
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,” Mr Manigold’s lawyer, Anais Sauvagnac, said.
The case and the verdict will have been watched closely by litigation groups in both the UK and US which are taking underwriters to court over their refusal to pay BI claims under disputed policy wordings. The fact that Axa has taken a decision to meet the claims under the policy will pile pressure on underwriters facing their own claims.
UK regulator the Financial Conduct Authority is already seeking to fast track several legal opinions on a range of disputed policy wordings with the results expected in the coming months.