Marsh UK Analyzes Threats from Latest Avian Flu Outbreak

November 14, 2007

Marsh’s London office has issued a detailed bulletin following the outbreak of the H5N1 avian influenza virus in Suffolk. The report recounts what is known about avian flu, and what the potential impact of a major outbreak of the disease might entail.

At the beginning of the report Marsh notes the following:
— 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 disease] style spread of the disease is unlikely. The outbreak in Suffolk 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 Suffolk 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 most scientists who have studied the threat have concluded, the real danger to humans will occur when the virus mutates in such a way that it can be transmitted directly from person to person. All of the cases so far have involved contact with birds. Marsh notes that when human to human transmission begins to occur “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. This is a real threat and businesses should take precautions.”

The report goes on to list in detail those areas at risk, and what precautions should be taken to mediate those risks. These areas include the following:
Business continuity management wildlife and poultry issues – emergency plans should be in place, which could include shutting down all business activity for a specified time.
Business continuity management – human mutation – preparations for a “worst case scenario” should be made. 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. 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 also lays out some of the more important “Insurance implications” of a major pandemic. These include the following:
Employers’ Liability – Employers’ Liability policies for £5 million ($10.4 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 – These policies provide coverage against liability for injury, material damage or limited financial losses of third parties that result from the acts or neglect of the insured. Most businesses have them, and “businesses and insurers are not, currently, imposing any specific Avian Flu exclusions. However, for both Employers’ and Public/Products Liability, these policies will only respond where there is a legal liability on the part of the insured, subject to the other policy terms.”

Environmental Impairment Liability (EIL) Coverage – These are separate policies that cover claims “for injury or damage arising out of pollution or contamination.” They may contain restrictive provisions.

Property Insurance – These cover business interruption risks, such as employees not being able to travel in certain areas; There are also extensions available to provide for cleaning up and disinfecting contaminated sites.

Cancellation and Abandonment – Policies cover events that may be cancelled as a result of Avian Flu. The organizers are reimbursed, provided that the “cancellation of the event is deemed necessary and beyond the control of the Insured.”

The above is a summary of Marsh’s conclusions. For the complete report, and further information, including contacts with Marsh personnel who are familiar with avian flu threats, go to:

Source: Marsh UK

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