Miller sees surge in demand for epidemic insurance as property market restricts cover further

Demand for specialist epidemic insurance has surged as the Covid-19 pandemic continues to escalate and insurers further restrict cover in property policies, according to London market insurance broker Miller. Although it is no longer possible to buy cover for the current coronavirus outbreak, a growing number of companies are thinking about how to protect against the next infectious outbreak, explained Richard Coyle, an alternative risk specialist at Miller. “We are now seeing a huge amount of interest in bespoke epidemic insurance from our clients, who have been blindsided by the severe economic impacts of Covid-19 and recognise the need to get an insurance solution in place for future events,” said Mr Coyle. “The devastating impact of Covid-19 demonstrates the urgent need for an epidemic risk insurance solution to protect company balance sheets in times of crisis. The frequency and severity of disease outbreaks is on the rise and, as such, we forecast a corresponding rise in the demand for this type of insurance,” he added. Faced with unprecedented disruption from Covid-19, many companies are turning to their insurance cover, including property damage and business interruption policies. A small number of organisations that had the foresight to purchase specialist standalone epidemic policies will have some recourse, but for the vast majority of businesses Covid-19 will most likely be an uninsured event, said Miller. Sue Taylor, one of Miller’s business interruption claims specialists, said every policy wording and insurer response to Covid-19 is likely to be different, so customers will need to read their insurance contracts and take advice from their broker. “However, the majority of traditional property policies will not respond to Covid-19 business interruption-related losses,” she said. Ms Taylor added that insurers are taking measures to further restrict cover for communicable diseases when property policies renew, adding specific exclusions for Covid-19 as well as broader exclusions for epidemics and pandemics. “I would expect the property insurance market will now move to exclude epidemic and pandemic cover, in much the same way it excluded terrorism exposures following 9/11 and the IRA mainland UK bombing campaign in the 1990s. As was the case then, we are likely to see a shift towards the purchase of standalone epidemic insurance in the future,” said Ms Taylor. Infectious disease outbreaks are not a new risk but have not featured highly on risk registers. According to the World Economic Forum (WEF), infectious disease has only ranked among the top five perceived risks once. This was back in 2015 and directly following the ebola epidemic, when it ranked as second highest in terms of impact. The WEF warned earlier this year that pandemics were a risk blindspot. However, communicable disease outbreaks are on the rise, fuelled by increased levels of urbanisation and global travel, as well as the transmission of viruses from animals to humans, known as spillover events. According to the Global Virome Project, threats posed by global epidemics and pandemics are greater now than at any other point in human history. Spillover events are now two to three times more frequent than 40 years ago, it explained. Recent outbreaks such as SARS, ebola and zika illustrate that we are ill prepared and extremely vulnerable to emerging viral threats, it added. But despite communicable disease outbreaks like ebola and SARS, most organisations have opted not to purchase epidemic risks cover, according to Miller. “Coronavirus is such an unexpected and unusual event, many businesses did not think of buying epidemic risk insurance, nor did they seek to extend property insurance to cover communicable diseases. Most companies just did not foresee this event or appreciate the impact a pandemic or epidemic could have on their operations and balance sheets,” explained Jason Sidgwick, Miller’s energy and mining claims specialist. Although niche, there is a specialist market that can provide tailored business interruption cover that responds to new communicable disease outbreaks. It ramped up following the emergence of ebola in 2014 and has continually evolved after subsequent disease outbreaks, such as the zika virus in 2016, explained Mr Coyle. Unlike the traditional property insurance market, these specialist insurers have invested in in-house teams and work with epidemiologists and virologists. Specialist epidemic risk insurance covers loss of gross profit due to an epidemic or pandemic outbreak. Limits are as high as $100m and can include access to specialised epidemic risk management experts to prepare for and mitigate the risk of an outbreak, according to Mr Coyle. The policy covers unknown and emerging viral diseases, as well as epidemic outbreaks of known disease types such as ebola and coronaviruses. The policy is triggered by the World Health Organization’s Disease Outbreak News bulletin, and insurance payouts are linked to the number of fatalities occurring within a pre-defined geographical area.

Miller sees surge in demand for epidemic insurance as property market restricts cover further

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Related Articles