The Ebola virus was discovered in 1976 but the latest outbreak, first reported in March this year, is by far the most widespread.
More than 5000 people have so far died from the disease, and another 5000 have been treated for it. The West African nations of Liberia, Guinea and Sierra Leone are the worst hit, but deaths have also occurred in Nigeria, the US and Mali.
The United Nations has declared the epidemic an international public health emergency. Although a number of Australians returning from West Africa have been tested for the virus, it is believed to pose little threat to Australia at this stage.
However, with heavy media attention likely to prompt questions to brokers, it presents an opportunity to update clients on the risks posed by pandemics.
Human history is littered with pandemics. The Black Death in the mid-14th century killed as much as half of Europe’s population in just four years. More recently, the Spanish Flu killed up to 100 million between 1918 and 1920.
Pandemics are inevitable and given the globe’s increasing urbanisation and burgeoning use of air travel, many epidemiologists believe the population is particularly susceptible to a mass outbreak today.
In addition to creating huge healthcare costs, the damaging power of pandemics comes from their ability to cause disruption. The 2009 outbreak of severe acute respiratory syndrome, better known as SARS, infected less than 9000 people but was still estimated by the World Bank to cost the global economy $US54 billion, after spreading to 37 countries.
The most exposed industries are those requiring a significant amount of face-to-face interaction, such as travel companies, airlines, restaurants and hotels. Although most good corporate travel policies would offer protection to an Australian business’ employee who contracted Ebola while overseas, protecting business at home is another matter.
If a pandemic such as Ebola were to get a foothold in Australia, it could severely disrupt many businesses. However, LMI Group founder Professor Allan Manning says the vast majority of business interruption insurance policies that include cover for infectious disease contain an exclusion which excludes losses arising from a disease that is notifiable under the Quarantine Act 1908. This includes Ebola, SARS and bird flu.
“The issue is that a serious outbreak could affect the already weakened Australian economy to the point that the accumulated losses are so great that the insurance industry does not have the funds to cover such losses,” Manning says.
“While it is hoped that the outbreak will be contained and no interruption losses arise, it is likely that the topic will come up in conversation and brokers need to explain the situation to their clients.”
However, last month Brooklyn Underwriting announced it had teamed with Lloyd’s to provide local access to a world-first business interruption specifically for an Ebola-related shutdown. Offering limits of up to $5 million, the policy is aimed at places of public gatherings.