World Health Organisation (WHO) update

WHO is now at Alert Level 6 - pandemic is evident with sustained contagion across several countries.

Developments

Swine flu is spreading with the number of infected people multiplying daily. Britain has the third highest number of cases in the World behind USA and Mexico with London and the West Midlands being particular hot spots. The summer strain of the virus seems to be mild, symptoms last for around a week, but with 14 deaths in UK to date it pays not to be complacent. 

In the current phase of the pandemic, where more people catch the virus in their communities rather than from abroad, it has become impossible to contain the outbreak and health services are directed to move to treatment strategies.

Managing the effects

The human toll is naturally a concern but there could also be a knock-on effect of reduced demand for goods, services, and raw materials and disruptions in the supply chain of a company.

Specific insurance coverage against the financial effects of swine flu is limited, expensive and comes with onerous time deductibles and is not necessarily the right solution. Treating the pandemic as a risk management issue and having robust risk management practices in place to mitigate the effects of absenteeism will be far more effective.

If the pandemic continues into the winter months the virus has the potential to become far more debilitating and our advice is to:

• React as if the pandemic is a truly business threatening event that needs careful planning to mitigate



• Form a high-level risk group to act as a focal point for receipt and dissemination of information to staff, customers and suppliers with authority and a budget to plan, react and make operational changes to the business



• Assess the effects on the business to date and how it has reacted to any outbreak



• Review business continuity plans including supply chain management



• Re-evaluate products and services that were considered critical in normal trading times and prioritise plans for their continuity



• Look closely at travel plans, hygiene factors, healthcare support, links with local occupational nursing, GP’s etc




• Consider  whether the home-working option is a possibility

Insurance coverage

The insurance cover situation on some of the mainstream insurances is:

Business Interruption

It is possible to extend a Business Interruption to cover loss of profit following an outbreak of a notifiable disease manifested by any person at the premises or within a specified radius of the premises. Notifiable diseases are listed in the Infectious Diseases Act, but at the moment, swine flu isn’t one of them and therefore most polices will not trigger. Even if swine flu is listed policies are unlikely to respond to a general or voluntary restriction of human movements.

Cancellation and Abandonment

Cover for cancellation of events due to swine flu is unlikely to be available at economic terms going forward, if at all. Policies in force before the outbreak are unlikely to have exclusions relating to swine flu and cover will operate provided the cancellation of the event is necessary or ordered by an outside agency.

The event would have to be affected by an outbreak in the area so that the venue becomes inaccessible and cancellation inevitable; reduced attendance is not a valid claim.

Travel

WHO is not recommending any travel restrictions and therefore normal policy cover applies.

Public and Products Liability

Public and products liability policies give cover against negligent acts of the insured which result in death or bodily injury to third parties or damage to their property. Proof that the infection was contracted from the negligent actions of the insured will be required before a claim will be accepted.

Most policies will either contain a full contamination exclusion or restrict cover to sudden accidental and identifiable incidents. Whether insurers chose to use that exclusion to refuse a claim remains to be seen.

Directors and Officers Liability

D&O policies will usually exclude cover for bodily injury but will cover indirect claims from shareholders for not managing an outbreak adequately. There may also be coverage for defending claims against individual directors and officers for actions under health and safety legislation.

For more information please contact your Oval Service team or for Risk Management and Business Continuity our Risk Services Director Neil Hodgson:

Tel:  01484 411121
Email:  neil.hodgson@theovalgroup.com

For insurance queries contact our Technical Director, Bob Powell:

Tel:  0115 937 1218
Email:  robert.powell@theovalgroup.com