No SARS Claims Seen By U.S. P-C Insurers U.S. insurance company executives and brokers say that to date the recent outbreak of Severe Acute Respiratory Syndrome has had no immediate claims impact on the property-casualty insurance industry, but that does not mean they are ignoring the issue.
According to the World Health Organization, as of April 7, there have been 2,601 cases of the disease, SARS, throughout the world, with 98 deaths attributed to it. Most of the cases have been found in China, where the disease is thought to have originated, with a total of 1,268 cases and 53 deaths.
Travel to Asia has dropped off dramatically, most recently underscored by the announcement by Continental Airlines that it would suspend nonstop flights between New York and Hong Kong because of the outbreak.
The insurance community, while at this point not seeing any claims stemming from the disease, is taking steps to protect employees and deal with the issue in any way necessary.
New York City-based insurance company American International Group issued a memo to all of its employees telling them that trips to affected areas should only be made if necessary and be as short as possible. Those traveling should avoid touching handles, doorknobs and railings. They also advised employees to wash their hands before touching their faces.
New York City-based insurance broker Marsh has set up an Asia-wide committee, according to one executive, to monitor the situation.
An executive at Arthur J. Gallagher & Co., based in Itasca, Ill., reports the broker has not seen claims stemming from the SARS outbreak. If there were any, they would expect to see it in the workers compensation area, but so far its been quiet, the executive said.
If there were a more severe outbreak of the disease that crippled businesses, clients would not see any help from their business interruption insurance, said Diane Richardson, associate editor for FC&S Bulletins.
(The National Underwriter Company in Erlanger, Ky., the parent company of this newsmagazine, also publishes FC&S Bulletins and FC&S coverage guides.)
Under most policies, she pointed out, business interruption policies are only triggered by direct physical loss and property damage. There are other instances where business interruption insurance can come into play, but the policy always covers some form of property damage, she said.
If quarantine is imposed, she observed, most policies say that if the imposition is ordered by civil authorities, preventing the insured from entering the premises, the policyholder would be covered under their business interruption coverage. However, the quarantine, again, would have to be related to a property loss.
The example she gave was the terrorist attack on the World Trade Center on Sept. 11. Civil authorities closed off the surrounding streets.
A quarantine situation caused by SARS would stem from human illness, she noted, "and that is not one of the coverage triggers."
Currently there is nothing to help businesses if there were such an event.
The only other coverage that could be affected by the disease would be workers comp, if the employee contracted the disease while working, said Ms. Richardson. But it would have to be a situation where the employee had not traveled somewhere out of the country and no one at home had come down with the disease previously.
She noted that her observations on workers comp coverage applied to the U.S. market. She was not sure if workers comp policies are exactly the same in Asia.
A third area that could possibly be affected by the SARS outbreak could be medical malpractice, if the doctor did not recognize the disease at the time. But, she noted that is not a unique liability since any misdiagnosis would trigger the policy.
Under a purely hypothetical situation, Ms. Richardson said, insurers could come up with coverage, possibly an endorsement to a business interruption policy, specifically written for disease and biological terrorism that could cripple an industry.
Several insurers who were contacted by NU said they were not contemplating any endorsements related to SARS.
A spokesperson at AIG said it is too early to tell what the companys response on the p-c side would be regarding SARS, but the company is keeping an eye on the situation.
Reproduced from National Underwriter Edition, April 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.