Entrepreneur Operating losses: embarrassing judgments for insurers

Operating losses: embarrassing judgments for insurers

Almost two years after the outbreak of the health crisis, insurers have not finished with the question of compensation for the losses of companies put in difficulty by the Covid. Judges continue to agree with insured companies, believing that they were covered against the “operating losses” suffered with the confinements.

In December, while a Paris court condemned Crédit Mutuel (which appealed), the Brest commercial court singled out Allianz by going in the direction of the Rennes group Le Duff, known for its sign “La Brioche Dorée”.

The group had asked its insurer to pay it more than 20 million euros to compensate for the losses suffered by its catering subsidiaries as a result of the confinements and restrictions imposed in 2020. The insurer had refused to pay on the grounds that its guarantee did not applied thatin the event of material damage to insured propertywhich in his eyes was not the case.

Beware of confusion

This point often comes up in discussions on “operating loss” guarantees, which have often cost insurers dearly, and in particular AXA. Insurers, reinforced by an analysis by the sector supervisor on this point, have repeatedly asserted that the overwhelming majority of operating loss contracts do not come into play within the framework of Covid. Why ? Because most of these contracts were designed to intervene following material damage to property, for example in the event of fire. Enough to generate lively legal debates on the notions of “insured property” and “property damage”.

In the case of the Breton company, the goodwill is legally an asset “certainly incorporeal” but indeed insuredbecause he was not included in the exclusions of the contract, write the judges. What is more, this insured property suffered material damage, since the restrictions linked to the Covid “alter or even destroy the clientele”. Contacted, Allianz did not comment. Neither did the Le Duff group.

This judgment is important, believes lawyer Jérôme Goy, who defends the insured company. “I have a lot of files in which the goodwill could be considered as insured property,” he argues. And to explain that the analysis would be valid for contracts negotiated by brokers for several companies having the same profile (contracts known as “with spacers”). On the other hand, this would not apply for the majority of other contracts. “In the general conditions of insurers, the lists of insured goods are, in most cases, restrictive”, concedes the lawyer. The goodwill cannot therefore be covered.

Drama for business

The commercial courts have been contradicted several times on appeal in the legal series on operating losses. However, this is not the first time that judges have challenged an insurer contesting the idea that the Covid crisis can constitute damage to insured property. Including on appeal.

In September, in a decision noted by Argus de l’Assurance, the Angers Court of Appeal ruled in favor of the agricultural equipment company Lacmé, based in Sarthe, against its insurer MMA (Covéa Group) on the grounds that the intangible assets, and in particular the clientele, were covered by the guarantee negotiated via a broker. “This is a remarkable decision because it puts an end to this debate on the nature of the property covered,” says lawyer Isabelle Monin Lafin, who was involved in the case on the business side. And to explain that it is a “file which applies to many French industrial companies” having used the same broker.

Contacted, the insurer MMA confirms having brought the case before the Court of Cassation. “It is not normal that two years after the start of the crisis we have to go to cassation to have the evidence judged. It is a tragedy for companies, because many of them have not recovered from the crisis and there are many in bankruptcy filing, ”regrets Isabelle Monin Lafin.

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