AXA France’s proposed €300 million settlement offer to thousands of restaurant clients who hold non-damage business interruption (BI) policies would reduce the uncertainty related to the ultimate financial burden of COVID-19 BI claims, says Moody’s analyst Benjamin Serra.
Yesterday, global insurance company AXA announced a proposal to settle with 15,000 restaurant clients in France who hold its “standard policy” with extended coverage for BI losses linked to administrative closure.
Despite believing that the insurance contracts this settlement will apply to do not actually cover administrative closures, AXA has offered to provide funds to help these clients recover the costs of lockdowns and business interruption they suffered due to COVID-19.
Commenting on the settlement offer, Moody’s analyst Serra, said: “The proposed settlement offered by AXA, if accepted, would reduce the uncertainty related to the ultimate costs of business interruption claims as well as the large news flow around conflicts opposing the group and its clients, which could affect AXA’s reputation.”
AXA, as well as a host of other insurers, came under scrutiny during the past 18 months or so over the validity of pandemic-related BI claims.
Throughout the pandemic, BI claims have sparked a number of legal battles as re/insurers argue their policies were never intended to cover losses from government lockdowns.
While in some parts of the world courts have ruled in favour of policyholders on some key issues, legal action is ongoing in the US and also Europe.
So, there’s clearly potential for additional claims to be honoured, or settlements to be agreed, with potential ramifications for reinsurance capital.