Marsh has issued a bulletin, following an outbreak of the avian flu virus H5N1 in the UK, which, outlines the risks and insurance implications for British businesses posed by the virus and the potential for a subsequent human pandemic.
The bulletin noted the following points concerning the potentially fatal infection caused by the virus:
— Humans can catch Avian Flu, but only from close proximity and handling of birds. It is deadly, with 50 percent mortality worldwide. It is a big threat to poultry, although factory farms are well-protected, and a BSE [mad-cow) type spread of the disease is unlikely. The outbreak in Norfolk may imply there is greater incidence of H5N1 in the wild than previously thought, and people in contact with birds should take extra care.
— Currently H5N1 is not in itself a business threat except to the poultry industry. UK businesses in the poultry industry should take it very seriously if they are not already doing so. In Marsh’s experience of this sector there are already very high standards of hygiene and safety, and businesses have already planned for an outbreak of this nature.
— Pandemic flu arising from a mutation of H5N1 would be less deadly than Avian Flu, but could lead to 50 percent absence from work at the peak, and therefore is a major business threat. The outbreak in Norfolk makes this no more likely to happen. The required mutation is more likely to occur in parts of the world where people live in close proximity to livestock, and will spread from there.
As Marsh notes, since the virus was first identified, the main concern has been the possibility that it will develop the ability to be transmitted from human to human. “At that point it may be only a matter of weeks before it jumps continents – and is likely to lead to immediate extensive restrictions on travel, and possibly the passage of some goods,” said Marsh. “This is a real threat and businesses should take precautions.”
The current threat concerns the UK’s poultry raising industry. Marsh urged “organizations that deal with birds (or other livestock in close proximity to poultry),” to put in place “emergency response plans” to identify any outbreaks and to put in place any necessary isolation and control measures to ensure the safety of staff and minimize the risk of spread.”
In addition these organizations need to think beyond these immediate responses, and “have plans in place that minimize the impact on their businesses and other businesses in their supply chains. These plans might include a controlled shut down of the business for a period.”
The bulletin duly notes that so far H5N1 has not mutated into human form, even though there have been cases of human infection, they have been caused by contact with infected birds, not spread from human-to-human contact. Even so Marsh said it believes “it is prudent to prepare for a potential worst case scenario. While many firms in the UK have business continuity plans to deal with a wide range of potential disruptions, they may not be adequately prepared for a pandemic, such as that associated with the possible human-to-human spread of a potential mutation of the current strain of Avian Flu.
“A human 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 pandemic, up to 50 percent of the workforce may be absent from work. To address this risk, firms may need to examine and amend their existing business-continuity plans.”
Marsh outlined a number of “key points for businesses to consider,” which include the following:
— Staff care and communication policy
— Travel restriction and quarantine policy
— Decontamination, cleaning and hygiene procedures
— Tamiflu or similar ‘prophylactic’ stockpiles
— Work-at-home strategy
— Key business process resilience plans
— Possible moth-balling plans for non-essential processes
In addition, businesses need to assess how a pandemic might affect services from suppliers and vendors, both domestically and overseas -in particular, in areas where incidence of the disease may be concentrated.”
As part of overall risk management, Marsh singled out the following areas of coverage that a potential avian flu outbreak would affect:
— Employers’ Liability – “Employers’ Liability policies for £5 million [$9.75 million] for each occurrence are compulsory for the vast majority of UK businesses and should not contain any exclusion or limitation, at least for this amount, that will prevent a claim from an infected employee being dealt with under the terms of the insurance.
— Public and Products Liability – The Public and Products Liability policy provides coverage against liability for injury, material damage or limited financial losses of third parties that result from the acts or neglect of the insured. This type of policy is held by almost all businesses and insurers are not, currently, imposing any specific Avian Flu exclusions.” These policies, however, “will only respond where there is a legal liability on the part of the insured, subject to the other policy terms,” Marsh noted. “Where a business is directly involved in the handling, processing or transport of any bird stocks, the ability to establish that such a liability exists becomes more likely, and the implementation of reasonable risk control measures to protect employees or others will be critical to the defense of any such liability claim.
— Environmental Impairment Liability (EIL) Coverage – Some insureds may also have separate and distinct coverage, under an EIL policy, for injury or damage arising out of pollution or contamination. These policies may contain restrictive provisions that will be invoked by insurers in response to claims for property damage or injury arising out of contamination by viruses.
— Property Insurance – The risk of interruption to the business is obvious if circumstances prevent employees getting to work through media advice “not to travel into particular affected area” or to “stay at home” or due to disruption to travel services.
The bulletin also indicated that “Cancellation and Abandonment policies placed at this time will have a specific Avian Flu pandemic exclusion. Coverage is not available on a buy back basis. Policies placed before the Avian Flu risk was deemed to be a threat will not have an Avian Flu exclusion. This means that any claims due to events cancelled, as a result of Avian Flu will be paid, providing that the cancellation of the event is deemed necessary and beyond the control of the Insured.
“In practice this means that Avian Flu must make it impossible for the event organizer to continue staging the event. Examples include: The conference center/venue being closed due to Avian Flu, and movement or travel being prohibited or severely restricted within the area where the event is being held.
“Cancellation and abandonment policies do not cover claims as a result of disinclination or reduced attendance. However, advice given by the World Health Organization not to travel to a certain country or area has been deemed to be a valid trigger for necessary cancellation. Where applicable, insurers will want the Insured to reschedule the shows to a later date rather than cancel. This is in some cases proving difficult due to the uncertainty of when the Avian Flu risk will be over.”
Further information may be obtained on the Marsh web site at: www.marsh.com. The bulletin also notes that “Andrew Keefe, Casualty Broker, Risk Management, Placement Practice at Marsh, is available for comment on the insurance implications associated with Avian Flu and a possible human pandemic.”
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