Published:  15-Sep- 2009  | Product Category:  Risk Consulting | Comments: 0        

The current outbreak of Influenza A (H1N1) has sparked fears of the potentially devastating human and economic consequences that may follow a global pandemic.

Businesses worldwide braced for significant disruptions to their normal way of operating and governments implemented advisories limiting travel and trade. Precaution was paramount as the World Health Organization (WHO) on June 11, 2009, raised its alert to Phase 6—the highest level—which indicates that "a global pandemic is under way." This action reflected the spread of the virus to different countries in various regions.

As more information became known and the threat became real, the H1N1 outbreak and the resulting public health response brought to the forefront the fact diseases, including influenza, can and may be spread globally. The interconnected global economy makes containing a contagious disease especially difficult and this has amplified the public health concern.

There are few insurers that currently offer standalone pandemic insurance coverage options to transfer non-physical losses. Coverage is expensive, typically includes significant attachment points, and clients are likely to be required to participate in coinsurance. Pricing of a pandemic product is driven by modeling, which can also be used to set parameters for deductibles. Client-specific inputs results in varying price and attachment points.

Most standalone pandemic policies include a public health trigger, usually requiring the WHO alert to reach level 5 or 6. For the H1N1 virus or associated variants, insurers are reluctant to consider inquiries for coverage because the alert is currently at phase 6 for this virus.

Measuring the Impact of a Pandemic on Your Business

In addition to the human toll, reduced demand for goods, services, raw materials, and disruptions in the supply chain of a company are possible side effects of a pandemic.

Marsh's Risk Consulting Practice can work with you to identify risk and limit its impact. Planning solutions include business continuity; claims consulting; clinical health care consulting; reputational risk and crisis management; modeling, analysis, and design; and supply chain risk management.

Under standard property policies, physical damage is necessary to trigger an actual loss. Insurers will likely contend that contamination of premises by the virus is not physical damage—and are even more likely to assert that possible contamination is specifically excluded through a "contamination" exclusion.

The Property and Supply Chain Risk Management Practices offers a customized supply chain product, Global Supply SecureSM (GSS) that includes pandemic coverage as a covered event. Specifically, GSS includes coverage for a WHO-declared phase 5 pandemic and a declared public health emergency by an authorized in-country government official. The policy will respond for the business interruption loss that results due to the interruption in the supply chain as the result of a covered event.

Be Prepared

Given the unpredictable nature of the pandemic threat, we can work with clients to help them better prepare their organizations, learn about the extent of their pandemic exposures, and structure a solution to fit their individual needs.

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