Avian flu adviser v2.qxp

February 2007
Avian Flu – Latest insurance and risk update
Humans can catch Avian Flu, but only fromclose proximity and handling of birds. It isdeadly, with >50% mortality worldwide. It is abig threat to poultry, although factory farmsare well-protected, and a BSE style spread ofthe disease is unlikely. The outbreak in Suffolkmay imply there is greater incidence of H5N1in the wild than previously thought, andpeople in contact with birds should take extracare. Currently H5N1 is not in itself a businessthreat except to the poultry industry. UKbusinesses in the poultry industry should takeit very seriously if they are not already doing Following the outbreak of H5N1 in the UK,
so. In Marsh’s experience of this sector there this Adviser outlines the risks and insurance
are already very high standards of hygiene andsafety, and businesses have already planned implications for British businesses arising
from Avian Flu and a subsequent human
Pandemic flu arising from a mutation of H5N1 pandemic.
would be less deadly than Avian Flu, but couldlead to 50% absence from work at the peak, Business continuity management – wildlife and
and therefore is a major business threat. The poultry issues
outbreak in Suffolk makes this no more likelyto happen. The required mutation is more The outbreak of H5N1 poses a major threat to the UK’s likely to occur in parts of the world where poultry sector. While steps are being taken to isolate the people live in close proximity to livestock, and outbreak, organisations in this sector must continue to The time to be really concerned is when a Organisations that deal with birds (or other livestock in mutation is reported that allows the virus to be close proximity to poultry) must have emergency response plans in place to identify any outbreaks and to point it may be only a matter of weeks before it put in place any necessary isolation and control jumps continents - and is likely to lead to measures to ensure the safety of staff and minimise the immediate extensive restrictions on travel, and possibly the passage of some goods. This is areal threat and businesses should take Marsh also recommends that such organisations need to think beyond these immediate responses, and haveplans in place that minimise the impact on theirbusinesses and other businesses in their supply chains.
These plans might include a controlled shut down ofthe business for a period.
Business continuity management – human mutation
Insurance implications
H5N1 is still a form of Avian Flu which has not mutated The outbreak of the H5N1 strain of Avian Flu in the UK into human form. While there have been cases of and possible human mutation of the virus will human infection, at this point human-to-human spread undoubtedly have an impact on businesses’ insurance is not proven, but we believe it is prudent to prepare for programmes, regardless of size or sector.
Below is an outline of the main types of insurance, the While many firms in the UK have business continuity potential impact of an outbreak on coverage and plans to deal with a wide range of potential disruptions, they may not be adequately prepared for a pandemic,such as that associated with the possible human-to- Employers’ Liability
human spread of a potential mutation of the current Employers’ Liability policies for £5m for each occurrence are compulsory for the vast majority of UKbusinesses and should not contain any exclusion or A human pandemic could escalate quickly, last for limitation, at least for this amount, that will prevent a many months, and infect 25 percent or more of the claim from an infected employee being dealt with world’s population, according to public health experts.
Many organisations believe that at the peak of apandemic, up to 50% of the workforce may be absent Should it become necessary, this type of policy would from work. To address this risk, firms may need to respond to employee claims for Avian Flu in the same examine and amend their existing business continuity way as any other infectious disease, provided legal liability is established, for bodily injury, death, diseaseor illness sustained by an employee within the Marsh recommends that management should review territorial limits of the policy and caused during the their firm’s risk management controls, human resource period of insurance. No exclusions are permitted by law policies, and communications capabilities, and update for the first £5m of each occurrence.
them based on the threat of a pandemic, as such anevent could mean having fewer people, losing certain Public and Products Liability
critical functions, or having staff work from home or The Public and Products Liability policy provides coverage against liability for injury, material damage orlimited financial losses of third parties that result from The main thrust of pandemic preparedness planning the acts or neglect of the insured. This type of policy is for businesses should be to reduce the peaks of held by almost all businesses and insurers are not, absenteeism. The key points for businesses to consider currently, imposing any specific Avian Flu exclusions.
However, for both Employers' and Public/Products Liability, these policies will only respond where there isa legal liability on the part of the insured, subject to the other policy terms. Where a business is directly Decontamination, cleaning and hygiene procedures involved in the handling, processing or transport of anybird stocks, the ability to establish that such a liability Tamiflu or similar ‘prophylactic’ stockpiles exists becomes more likely, and the implementation of reasonable risk control measures to protect employeesor others will be critical to the defence of any such Possible moth-balling plans for non-essential Environmental Impairment Liability (EIL) Coverage
Some insureds may also have separate and distinctcoverage, under an EIL policy, for injury or damage In addition, businesses need to assess how a pandemic arising out of pollution or contamination. These policies might affect services from suppliers and vendors, both may contain restrictive provisions that will be invoked domestically and overseas - in particular, in areas by insurers in response to claims for property damage where incidence of the disease may be concentrated.
or injury arising out of contamination by viruses.
Property Insurance
Cancellation and Abandonment
The risk of interruption to the business is obvious if Policies placed before the Avian Flu risk was deemed to circumstances prevent employees getting to work be a threat will not have an Avian Flu exclusion. This through media advice “not to travel into particular means that any claims due to events cancelled as a affected area” or to “stay at home” or due to disruption result of Avian Flu will be paid, providing that the cancellation of the event is deemed necessary andbeyond the control of the Insured.
There could also be a more direct affect due to anincident occurring at or near the vicinity of the In practice this means that Avian Flu must make it insured’s premises, thereby causing either absences impossible for the event organiser to continue staging through fear (of employees) or loss of attraction (of the event. Examples of this include the conference customers) or even the physical intervention of a centre/venue being closed due to Avian Flu, and competent local/civil authority ordering closure of movement or travel being prohibited or severely restricted within the area where the event is being held.
There may also be costs incurred in “cleaning” an Cancellation and abandonment policies do not cover affected area of the premises of some organism that claims as a result of disinclination or reduced attendance. However, advice given by the World HealthOrganisation not to travel to a certain country or area So how might a Property Damage and Business has been deemed to be a valid trigger for necessary cancellation. Where applicable, insurers will want theInsured to reschedule the shows to a later date rather 1. A standard Business Interruption trigger requires
than cancel. This is in some cases proving difficult due that interruption to the business must be caused by to the uncertainty of when the Avian Flu risk will be damage (often described in policy triggers as “physical damage”) to property (used by theInsured) at the insured’s premises.
2. In respect of any actual incident or discovery of
organism on the premises, insurers would arguethat the presence of avian flu on the premises doesnot constitute “physical damage” (or even “damage”)to property under the policy.
The obvious focus for consideration of any valid coverfor business interruption is the general availability inthe UK marketplace of an extension of cover for“Infectious Diseases”. This is an extension wording thatgrants cover typically for three-month Indemnity Periodand for sub-limits in the range of £0.5m to £5m.
However cover under this extension is more likely thannot to be compromised by commonly imposed insurerrestrictions limiting cover to an incident on theinsured's premises only and/or to it being an event thatmust be notifiable by order to a competent authority.
It is not currently the case that an outbreak of a humanstrain of Avian Flu is notifiable.
More information
For further information on how Marsh is advising clients on the risk
implications arising from Avian Flu, please contact your client executive.
The information contained in this publication provides only a general overview of subjects covered, is not Copyright 2007 Marsh Ltd All rights reserved intended to be taken as advice regarding any individual situation and should not be relied upon as such.
Insureds should consult their insurance and legal advisors regarding specific coverage issues.
Marsh Ltd is authorised and regulated by theFinancial Services Authority This document or any portion of the information it contains may not be copied or reproduced in any formwithout the permission of Marsh Ltd, except that clients of Marsh Ltd need not obtain such permission whenusing this report for their internal purposes.
Marsh Ltd, Tower Place, London, EC3R 5BUwww.marsh.co.ukTel: 020 7357 1000

Source: http://www.marsh.fi/risk/pan/documents/AvianFluadviser_070207.pdf