In what may be the first of many similar moves to come, a large United States insurer - based in Zurich, Switzerland - has informed its customers that it has started restricting coverage for claims related to the outbreak and spread of Ebola. According to The Wall Street Journal, ACE Ltd. said on Tuesday that it is using the Ebola exclusion in new and renewal policies “‘on a case-by-case basis’ for U.S. customers ‘that have foreign travel exposure to certain African countries.’”
The trend that ACE is setting could create insurability problems for several business sectors including those involved in energy and commodities as well as NGOs and religious outreach groups. Relatedly, Guinea, Liberia, and Sierra Leone are all heavily dependent on agriculture and mining to support their economies. Both of those types of operations are at greater risk to decline if Ebola continues to spread because of the nature of the workforce required to conduct those operations. If the outbreak of Ebola continues to spread, greater insurance restrictions and new exclusions will likely follow. This analysis from Manji Cheto at Teneo Intelligence offers additional insight into the economic implications of the Ebola outbreak in Africa.
Direct economic impact - both in West Africa and internationally - of organizations being impeded from doing business in Ebola hotspots aside, this and similar insurance exclusions may create far-reaching and unforeseen secondary impacts in the future. Businesses and organizations, even those not yet affected by Ebola, should be aware of these risks and should consider them carefully. To combat risk of loss and economic exposure, potentially affected entities may need to seek alternative insurance agreements or new insurers and may need to consider alternative business arrangements in the future.
Fortunately, as ACE and others that may follow begin to exclude coverage for Ebola related claims, at least one insurer is stepping in to fill part of that void in coverage. On October 15th, William Gallagher Associates and Miller Insurance Services announced that they would be offering “Pandemic Disease Business Interruption Insurance” from the Ark Syndicate at Lloyd’s. The coverage is specifically meant to insure against “lost revenue arising out of a non-physical damage event like a voluntary or involuntary quarantine of facilities and medical professionals” and may be the ideal protection for healthcare providers globally.