The SARS outbreak in 2003 contributed to policy changes that will make it difficult now for firms to make coronavirus-related business interruption claims.

Leon Briggs, Head of Forensic Advisory Services New Zealand at major loss adjuster Sedgwick, says the SARS outbreak “was possibly a wake-up call” for insurers.

Mr Briggs told insuranceNEWS.com.au some policies in 2003 specifically insured against losses arising from diseases, but many of those extensions have been deleted since that time.

The SARS event was followed by an outbreak of Middle East respiratory syndrome, and insurers have since become more careful about exposure to virus threats such as the current coronavirus, now known officially as COVID-19.

“The extent of how this event could cause loss to so many customers at once gives an aggregation risk or exposure risk to insurers that is not like an earthquake risk, or even bushfire,” Mr Briggs said.

“Logically you can see why [insurers] wouldn’t want to pay for something that in the worse case scenario is going to affect every business.”

He says some business interruption policy wordings may provide a degree of cover, but more generic policies in the marketplace suggest it would be difficult to make a claim.

Policy exclusions include any infectious animal or human disease, while limitations based on notifiable diseases should now be in effect for the coronavirus.

Apart from exclusions, Mr Briggs says it is also difficult for virus-related business interruption to fit within existing frameworks, which require triggers such as property damage.

Policies also have extensions for contingent losses, such as lack of access, loss of utilities or other circumstances that insurers view as reasonable to cover, but which are unlikely to extend to viruses.

Mr Briggs says day-to-day trading repercussions from the virus will also have implications for unrelated covered events such as fire, with calculations of lost income likely to factor in revenue downturns.

Travel businesses have been most affected by the virus in Australia and New Zealand, while Asian restaurants have also seen fewer customers. But the closure of factories in China also has implications for manufacturers’ supply chains.

Large multinationals could have bespoke arrangements that cover virus impacts to some extent, but similar restrictions and trigger issues may apply, he says.

“You struggle to see a wide volume and value of claims, certainly in Australasia.”