Why pandemics will be excluded from restaurant owners' insurance contracts from 2021

DECRYPTION

The conflict between restaurateurs and their insurers does not end.

Since the first confinement, several catering professionals have taken legal action accusing insurers of not compensating them for their loss of turnover linked to the Covid.

It is now a new battle which opens since, for a few days, certain contracts are purely and simply canceled by the insurers.

In question, a mandatory endorsement which excludes compensation for pandemic reasons, a risk that insurers say they cannot cover alone.

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Restaurant owners faced with a fait accompli

It all started with letters sent by insurers to restaurateurs at the end of the summer.

Inside, a proposed amendment reformulating the guarantee clause in the event of operating loss linked to an epidemic.

This reason is now excluded from the contract.

Restaurant owners have two choices: accept this new clause or refuse.

In the second case, the contract will be automatically terminated by the insurer on December 31.

"I knew that this would lead to termination, but I did not want to sign this amendment. When I received the mail, I was still hesitant to take Axa to court as others have done", explains Babeth Leduc , restaurateur in Vendée. 

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"I followed the trials that took place all over France. I think that the insurers were not up to it but I was hesitant. With this decision, now it strengthens me in the idea that I will do it ", she adds.

"I have good relations with my insurer. He warned me: in the event of termination by the insurer, it is not easy to be reinsured behind. But he told me that he would try to find me new insurance. "

The fact remains that this new contract will be similar to the one offered by Axa.

"That's one more worry. We didn't need that at the moment," sighs the restaurateur.

Losses impossible to cover for insurers

Babeth Leduc is not the only one in this scenario.

Even great chefs have seen their contracts terminated by their insurers.

Among them, Jean-François Piège was even moved on Facebook by publishing the letter sent by Axa.

"Pandemic situations are unfortunately not insurable. They do not allow the pooling that underlies the insurance system because everyone is affected. The losses linked to the Covid are estimated at 180 billion euros in France. C 'is beyond the reach of insurers, "says Stéphane Pénet, deputy general manager of the FFA, the French Insurance Federation.

But why such a change?

Why now ?

"In 93% of contracts, the pandemic is not a ground for compensation. But there are around 7% of contracts with French restaurateurs in which the wording of the clause, which often simply referred to an 'epidemic', involved interpretation ", emphasizes Stéphane Pénet.

In fact, it is this vagueness that has allowed a number of restaurateurs to sue their insurer.

And it is still this vagueness that has led courts to agree with the insured in first instance.

The deputy general manager of the FFA puts forward a justification: "a crisis like that of the Covid-19, no one had imagined it".

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Application of a notice from the insurance officer

Following the legal actions, the ACPR - the prudential control and resolution authority, the insurance gendarme - took up the case.

It analyzed the contracts where a doubt existed and it delivered an opinion, non-binding, inviting the insurers to clarify the imprecise contracts.

"We could not keep this doubt", abounds Stéphane Pénet, of the FFA.

Axa, Crédit Mutuel, Generali, Allianz and the other major French insurers have therefore implemented this ACPR recommendation.

The time to sort out the contracts, letters with the rider were sent over the summer and negotiations were therefore held even as the restaurateurs were closing again because of the re-containment.

In fact, insurers have been accused of lacking solidarity during this difficult period.

"We know that the situation is difficult. We are the first contributor to the solidarity fund for VSEs and SMEs. We are very invested in helping restaurateurs", defends Axa.

"Simply, we are constrained by the expiry of the contracts, December 31 in most cases. So we sent the amendments." 

Insurers are constrained by ... their own insurers

In reality, insurers are also under pressure from reinsurers.

These large groups that insure insurers have strong backs since they operate on a global scale.

In the event of an epidemic in one country, they rely on another where everything is going well to support insurers in difficulty.

A system called into question by the pandemic, global by definition, of Covid-19.

Suddenly, the reinsurers also found themselves in difficulty.

"We cannot insure the entire planet. We do not have the funds to pay all the claims related to Covid," explains Nicolas Boudias, general delegate of Apref, the Association of Reinsurance Professionals in France.

As early as March-April, reinsurers therefore informed insurers that they would not insure them if they kept contracts in their portfolios that cast doubt on the epidemic risk.

And this from 2021. "We are at the end of the chain. It was imperative for the system to remain standing", supports Nicolas Boudias.

Restaurant owners therefore have until December 31 to accept or reject the amendment.

But whatever they decide, all insurers are on the same line: next year, the Covid will not be able to appear on any contract as a ground for compensation.