France
Has the official regulator/authority intervened to help resolve contractual uncertainty around the validity of BI claims?
No.
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".
Do insurance policies in your jurisdiction generally restrict BI to losses directly resulting from physical damage?
Yes.
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.
Are there any court proceedings currently dealing with the validity of BI claims?
Yes - see following column
Have any judgments been given that deal with BI claims in relation to the current COVID-19 pandemic or other contagious/infectious diseases?
Yes
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.
In a similar claim against Axa, the Commercial Court of Lyon finally validated the warranty disclaimer by a decision dated November 4, 2020, considering that it was likely that only one establishment in the department would be closed due to an epidemic as Covid-19, and that the extent of the epidemic was not necessarily on a territorially wide scale, which is a quite surprising analyse.
In a decision dated September 24, 2020, the Commercial Court of Rennes ordered AXA to pay 60,000 euros on a provisional basis to a starred gastronomic restaurant “Racines”, interpreting that the contract covered the risk of an epidemic as Covid-19. The Court also ordered a technical appraisal.
More recently, in a decision dated December 22, 2020, the Commercial Court of Annecy also ruled on the merits of a case concerning compensation for operating losses suffered by a restaurateur in his favour. The Court declared the warranty disclaimer void, ordered AXA to pay the restaurateur 60,000 euros as a provision and ordered a technical appraisal to assess it.
It would appear that in an important dispute before the Commercial Court of Rennes between the football club Stade Rennais and its insurers GAN Assurances and QBE amounting several million euros, all parties are negotiating an amicable agreement.
A trend is therefore emerging in France quite in favour of policyholders who often win their cases before courts. Somehow, we will have to wait for some more judgements of the Courts of Appeal in the next months to have a clearer image of the trend.
Name of regulator, websites and articles of interest
French Federation of Insurance Companies website:
https://www.ffa-assurance.fr/infos-assures/coronavirus-covid-19-et-assurance
