Marsh has issued an extensive bulletin, which outlines the risk and insurance implications for businesses arising from the possible pandemic of the “Swine” or “Mexican” flu.
The bulletin noted that the news media had reported “confirmed cases of Swine Flu (A/H1N1) among the human population in Mexico, Canada, the US, the UK and Spain, as well as suspected cases in several other countries. It also pointed out that the “H1N1 flu strain was responsible for the Spanish Flu pandemic in 1918, which is estimated to have caused up to 50 million deaths worldwide.”
Although swine flu is considered to be common in pigs, it is “usually only contracted by people in close contact with infected animals,” said Marsh. “Human to human transmission is rare but has been confirmed with the current strain recently found in Mexico.
“This virus is being described by the World Health Organization (WHO) as a new subtype of A/H1N1 not previously detected in pigs or humans; a mutation which may allow it to pass more easily among the human population.
“The WHO is currently at Level Four of its Pandemic Alert, which reflects limited infection among the human population and reported cases in multiple countries. The change to a higher phase of pandemic alert indicates that the likelihood of a pandemic has increased, but not that a pandemic is inevitable.
“Should Level Five be declared, the WHO would consider it ‘a strong signal that a pandemic is imminent and that the time to finalize, the organization, communication, and implementation of the planned mitigation measures is short’.”
If it is proven that the virus is easily transmitted from human to human and the WHO continues to increase the threat level, the possibility of restrictions on travel and the passage of some goods, may ensue.
Marsh summarized the potential dangers to businesses as follows:
— Unlike Avian Flu, it is believed that this outbreak does not pose a significant threat to livestock farmers, who were concerned by the spread of disease by migratory birds.
— The psychological impact could still be widespread. In Mexico, the majority of restaurants and bars are closed, public events are cancelled, and many people are staying at home and away from work, rather than travelling.
— The travel and tourism industries are likely to be adversely affected by falling passenger numbers, if tourists choose to stay at home or change their travel. Countries such as the UK, France and Germany are now advising against all but essential travel to Mexico.
— Supply chains may be affected if the virus spreads, particularly where suppliers are from countries with denser populations and more restricted access to healthcare.
Marsh’s advice concentrates on the “procedures or plans for emergencies” that address the “impact on business continuity and/or crisis management.” It also warns businesses to keep up to date on the latest developments concerning the disease. “A pandemic could escalate quickly, last for many months, and infect 25 percent or more of the world’s population, according to public health experts. Many organizations believe that at the peak of a severe pandemic, up to 75 percent of the workforce may be absent from work.”
Marsh recommends that a company’s management review its risk management controls, human resource and other pandemic policies, crisis management plans and crisis communications capabilities. The full list of what this review should encompass, and what additional threats and steps may be involved in addressing the crisis, may be obtained on Marsh’s web site at: http://global.marsh.com/news/press/pr20090428.php.
Marsh also analyzes the potential insurance implication of the flu outbreak. It notes that the “outbreak of Swine Flu among the [UK] population will undoubtedly have an impact on businesses’ insurance programs, regardless of size or sector.” These include: Employers’ Liability, Public and Products Liability, Environmental Impairment Liability (EIL) Coverage, Business travel insurance and Property Insurance.
Marsh also pointed out that property damage or business interruption “requires that interruption to the business must be caused by damage (often described in policy triggers as ‘physical damage) to property (used by the insured) at the insured’s premises.”
“In respect of any actual incident or discovery of organism on the premises, insurers could argue that the presence of Swine Flu on the premises does not constitute ‘physical damage’ (or even ‘damage’) to property under the policy.”
However, Marsh noted that, in the U.K. at least, “an extension of cover for ‘Infectious Diseases'” is available. The extension wording typically provides coverage “for a three-month Indemnity Period and for sub-limits in the range of £500,000 [$738,442) to £5 million [$7.38 million].”
In addition Marsh explained that for event cancellation policies “placed before the Swine Flu risk was deemed to be a threat will not have a Swine Flu exclusion. This means that any claims due to events cancelled as a result of Swine Flu are likely to be paid, providing that the cancellation of the event is deemed necessary and beyond the control of the insured.
“In practice this means that Swine Flu must make it impossible for the event organizer to continue staging the event. Examples of this include: the conference centre/venue being closed due to Swine Flu, and movement or travel being prohibited or severely restricted within the area where the event is being held.”
Source: Marsh – www.mmc.com or www.marsh.com
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