A court in Germany has ruled that insurers are not automatically entitled to pay compensation to restaurants and hotels forced to close during the country’s initial coronavirus lockdowns.
The ruling from the federal court in Karlsruhe follows a case from a restaurant owner in Travemunde who sued AXA due to an officially ordered lockdown of their restaurant in 2020. During this time, reports Handelsblatt, the restaurant owner could offer only a delivery service, dampening severely revenues.
The German news site NDR reports that the restaurant owner was Marco Ceccaroli, who had taken out a policy with the insurer ‘long before the pandemic’. Ceccaroli reportedly asked the insurer for €40,000 because of his loss of business.
The basis of AXA’s case was that its insurance policy for business closures did not cover pandemics, only a list of certain diseases and circumstances such as an outbreak of norovirus or salmonella. Other insurers reportedly referred to the German Infection Protection Act, which did not include coronavirus at the time. There were also questions about whether an establishment was fully closed if a takeaway service was in operation.
Another argument put forward by AXA was that the premiums for such policies were so low, said to be in the three-to-low-four-digit range, that it was obvious that pandemics were not covered.
According to the German Insurance Association (GDV), 470 similar lawsuits have been launched in the country, with nine out of ten being decided in favour of the insurer. Of 133 appealed cases, 95% of them had also been decided in favour of the insurer.
For the industry, business closure insurance is reportedly a niche product: Overall, only a small part, according to GDV about 73,000, of the 3.5m companies in Germany had taken out such a policy at the beginning of the corona pandemic. The contribution volume amounts to about €26m per year.
Long term, the case may end up being a black eye for the insurance industry. The news station Tagesschau interviewed Ceccaroli, who sounded resigned to the verdict. He said he had decided to remain insured with AXA, explaining, “They are all the same. It doesn’t matter which one you go to. I signed it. I need insurance coverage for my store.”
Ceccaroli should not be entirely without financial help. The German government has an ‘umbrella scheme’ worth €30bn that covers up to 90% of fixed costs not covered by revenues for business that saw a turnover decline between March 2020 and June 2021 of at least 30%.
Germany has seen repeated lockdowns since the beginning of the coronavirus pandemic, with an initial five-to-six-month lockdown in mid-2020 followed by another of similar duration at the end of the year going into 2021.
Since then, the country has struggled to get its population vaccinated after a botched rollout of its vaccination programme. Due to the Omicron surge, the nation currently operates a system where those refusing to vaccinate are no longer allowed to enter many public spaces or travel on public transport.
The situation is such that some health insurers within the nation are reportedly asking the federal government whether they can begin to refuse to pay for medical treatment for those refusing to be vaccinated.
