Exclusions should limit swine flu impact
As the world braces for the social and economic implications of the H1N1 swine flu pandemic, the insurance industry isn’t joining in the general panic.
Infectious disease-related exclusions have become almost universal, particularly in business interruption (BI) policies, in the wake of the avian flu scare in 2006 and the Severe Acute Respiratory Syndrome (SARS) outbreak in Asia in 2003.
Of course, the industry will be affected by the impact on its workforce. The Federal Government estimates workplace absenteeism of between 30% and 50% will occur in a pandemic.
Interruption Underwriting Agencies MD Leo Quoyle told insuranceNEWS.com.au most BI policy wordings in Australia have changed to exclude diseases listed under the Quarantine Act of 1908, a move which he believes has been initiated by reinsurers.
Swine flu is now listed under the Act as a quarantinable disease.
“Even for the other policies that may not have the exclusion, every endorsement I’ve seen says the premises must be closed by a relevant authority,” Mr Quoyle said.
“It would have to get pretty bad, for instance, before all restaurants were closed.”
A client alert released by mega-broker Marsh says some BI insurers may exclude any illness which is subject to a government pandemic alert.
For commercial property policies, it says, the insured must successfully argue that a pandemic has caused physical loss or damage to their property. Also, exclusions for contamination, mould, disease and pollution may apply.
Marsh says there is coverage in general liability for injury or property damage caused by an unexpected and unintended event, but some insurers may argue that pandemics are not covered due to broadly worded pollution exclusions. Also, insured parties must comply with all relevant statutory obligations and regulations.
A workers’ compensation claim would need to prove that exposure to a pandemic illness could only have happened in the workplace.
The Marsh alert says personal accident and sickness policies are likely to provide coverage at this stage, although the situation may change when policies are renewed.
In corporate travel, limited or no cover may apply for travel to countries where the Department of Foreign Affairs and Trade travel advice is at level 4 or 5.
Infectious disease-related exclusions have become almost universal, particularly in business interruption (BI) policies, in the wake of the avian flu scare in 2006 and the Severe Acute Respiratory Syndrome (SARS) outbreak in Asia in 2003.
Of course, the industry will be affected by the impact on its workforce. The Federal Government estimates workplace absenteeism of between 30% and 50% will occur in a pandemic.
Interruption Underwriting Agencies MD Leo Quoyle told insuranceNEWS.com.au most BI policy wordings in Australia have changed to exclude diseases listed under the Quarantine Act of 1908, a move which he believes has been initiated by reinsurers.
Swine flu is now listed under the Act as a quarantinable disease.
“Even for the other policies that may not have the exclusion, every endorsement I’ve seen says the premises must be closed by a relevant authority,” Mr Quoyle said.
“It would have to get pretty bad, for instance, before all restaurants were closed.”
A client alert released by mega-broker Marsh says some BI insurers may exclude any illness which is subject to a government pandemic alert.
For commercial property policies, it says, the insured must successfully argue that a pandemic has caused physical loss or damage to their property. Also, exclusions for contamination, mould, disease and pollution may apply.
Marsh says there is coverage in general liability for injury or property damage caused by an unexpected and unintended event, but some insurers may argue that pandemics are not covered due to broadly worded pollution exclusions. Also, insured parties must comply with all relevant statutory obligations and regulations.
A workers’ compensation claim would need to prove that exposure to a pandemic illness could only have happened in the workplace.
The Marsh alert says personal accident and sickness policies are likely to provide coverage at this stage, although the situation may change when policies are renewed.
In corporate travel, limited or no cover may apply for travel to countries where the Department of Foreign Affairs and Trade travel advice is at level 4 or 5.