The rapid spread of the H5N1 avian flu virus over the past several months is unprecedented in the disease's history. World health authorities, governments and businesses have watched with concern as the virus has crept out of Asia to gain a foothold in Europe, the Middle East and Africa.
While the H5N1 virus has not yet mutated to where it can spread from one person to another, the effect of a potential flu pandemic on human life and business disruption could far exceed a terrorist attack and wreak havoc on the insurance industry.
It is precisely because the insurance industry has not yet been tested on the impact of a global flu pandemic that intense debate and speculation has been generated. This sense of urgency grew throughout February and March this year when 17 further countries recorded outbreaks: Nigeria, Niger, France, Switzerland, Poland, Germany, Egypt, Iraq, Azerbaijan, Bulgaria, Greece, Italy, Slovenia, Iran, Bosnia and Herzegovina, Austria and India.
In our view, the seemingly sporadic appearance of H5N1 in countries such as Nigeria and Niger, which are far from any other country with bird flu, means the virus is present in more countries than is being reported. It is also likely that there are more human cases than have been reported–93 deaths out of 173 cases since 2003–as the health infrastructure is limited in many countries. Those with mild or moderate symptoms, in fact, may not see a doctor.
Any future spread of bird flu is likely to continue to move roughly along the routes of migratory birds. The United States is specifically concerned with Alaska and Hawaii, which are expected to host migratory birds–potentially from infected regions–during the coming summer months.
For instance, in Alaska–where birds with H5N1 could mix with birds that will migrate south into the United States later in the year–the government has implemented a $29 million early detection program to monitor the migratory bird populations. The same could happen on the East Coast where birds migrating from Eurasia to Northern Canada mix with North American migratory patterns.
While this poses a definite risk to North American poultry, U.S. and Canadian poultry farms are more isolated from each other and from wild birds than they are in Asia–making them somewhat more protected from a new strain of bird flu.
At this time, H5N1 poses a greater risk to the poultry industry in Europe, where bird flu is already having multiple effects on the economy. More can be expected should the virus spread further on the continent.
Consequences include slowed cross-border travel due to inspections, decreased poultry consumption, decreased travel to infected countries and lost poultry trade with uninfected countries. France, for example, has already had its poultry banned by 20 countries. The United States has banned bird imports from 17 non-European countries and parts of France.
In addition to birds, there is a slight risk to other animal stock. H5N1 has infected tigers, cats and pigs. Other avian flu strains are believed to have infected horses.
This latter target set came to light in a 1989 outbreak that struck down horses in Jilin, China. That outbreak, which involved a different strain of avian flu from the current H5N1 strain, left as many as 20 percent of the infected horses dead. It should also be noted that equine flu is currently the most common respiratory tract infection of stabled horses. Any infection of pig stocks could also hit breeders and farmers hard.
The risk of a human pandemic, which would occur should H5N1 mutate to be transmissible between people, remains present but "relatively low" at this point. In fact, the virus has not shown signs of being more infectious or transmissible among humans thus far. Given the disease's impact on birds, the number of human cases to date is very small with only 13 cases confirmed outside of Asia, in Turkey and Iraq.
The continued persistence and spread of H5N1, however, allows the virus more opportunity to infect humans and thus mutate. If this should happen, an outbreak would most likely occur in Southeast Asia or Africa–regions where people are in close contact with poultry and birds.
While an H5N1 pandemic is not inevitable, companies should make contingency plans for a flu pandemic as these plans would also be useful in responding to other disease outbreaks.
If and when a flu pandemic does arrive, it would come in several waves of higher infection rates. Each would last two-to-three months, for six-to-18 months in duration.
Developed countries will likely be affected later and recover earlier, due to their advanced health infrastructures and greater access to vaccines (once the vaccines are developed). The death toll would be highest in Southeast Asia and other less developed regions in South Asia and Africa.
It also would take at least two-to-four months to develop a vaccine for the novel strain, and longer to manufacture enough to meet a global demand. It is likely that no one will have immunity for at least several months from the time the new strain emerges, and will still be susceptible to infection for about two weeks after inoculation.
If a human pandemic emerges, businesses can expect to see disruptions similar to the SARS outbreak in 2003.
It should also be noted that post-SARS, the insurance industry adopted the practice of excluding coverage for business interruption arising from pandemics. If these exclusions are not relied upon or are unenforceable, however, the insurance industry could potentially be facing claims on the same scale as Sept. 11, 2001.
During the SARS outbreak, hotels, consumer industries, restaurants, airlines and tourism were on the front lines. Global trade also was slowed down due to inspections and quarantines.
Regarding operational risks during a pandemic, disruptions to business would figure highly. For example, businesses would likely have to deal with high employee absenteeism due to illness, caring for the sick, or fear of infection, while expatriate employees may have to be evacuated.
Alongside these developments would be the strain to the health care sector, as hospitals would struggle to cope with an increase in patients. Businesses and governments should also keep in mind that first responders, including the police, would also be affected, potentially straining security forces.
with sick chicken cartoon…
© 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.