NU Online News Service, Sept. 23, 2:35 p.m. EDT

NEW YORK--As global concern grows over an outbreak of the H1N1 flu, most U.S. companies remain unprepared to realistically deal with an outbreak, a Marsh insurance brokerage executive said.

Gary S. Lynch, managing director, global leader of Marsh Risk Consulting, Supply Chain Risk Management, gave that warning during a luncheon of the Association of Professional Insurance Women.

Mr. Lynch said there are a number of reasons for companies not implementing aggressive plans for dealing with the H1N1 virus outbreak that was first discovered in Mexico in April of this year.

He explained that despite the influenza outbreak rising to a Level 6 by the World Health Organization (WHO), the highest level of contamination and concern, corporate planners are not as alarmed as they should be principally because there have not been a large number of deaths from the outbreak. The fact that the outbreak is now global in dimension has also contributed to a lessening in concern.

"What was unique is no longer unique," he noted.

However, he noted, while there have been only 3,500 deaths as of Sept. 14, influenza does have a pattern of morphing into something worse. The best demonstration of this is the 1918 pandemic which killed possibly millions globally. It took three to four years after it was initially discovered before it developed into a more lethal form.

While the Center for Disease Control (CDC) has put out standards for dealing with the outbreak, many private companies are still struggling with their planning, Mr. Lynch related.

"The threat remains vague, and they do not understand the pain of disruption," he told National Underwriter.

Businesses are not coordinating all their different departments in the discussions over potential liabilities and impact on their operations, he said, leading to failure to understand the risk fully.

In his address, he noted that in one survey two-thirds of companies said they could not continue their operations if 50 percent of their employees did not show up, something he indicated was not outside the realm of possibility.

Mr. Lynch also noted that many businesses have not considered the full impact of supply chain interruption, concentrating on their front-line vendors but not considering how the shutdown of other suppliers could impact them, or what they would do if that happened.

Some companies will be more impacted than others, he noted, such as sports venues and the hospitality industry.

"The question to ask yourself, as you look at the relevancy of this issue, is how does this really affect my industry, what I do and my ability to create value in the marketplace," he observed.

He added that companies need to prioritize what is most valuable to their organizations and how to deal with those losses. At the minimum, companies need to focus on what they need to do to maintain their level of operation and create a safe work environment for their employees.

As far as a risk transfer mechanism, Mr. Lynch said there is none available. After the outbreak began to reach pandemic levels, insurers excluded influenza-related claims from their policies. To his knowledge, no one is marketing any coverage, such as business interruption, for this risk.

Ironically, yesterday's address was to be given by Karen Avery, U.S. Business Continuity Management Practice Leader for Marsh, but she cancelled at the last minute because she had the flu.

Special Reports /

H1N1, Flu Outbreak Has U.S. Industry Unready, Marsh Finds

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