Following comments by the Prime Minister, Boris Johnson and lately Rishi Sunak, the Chancellor over the last couple of days regarding Coronavirus business interruption and ‘Pandemic’ cover, along with the statement on the Government website, it is worth clarifying what notifiable diseases cover Insurers actually provide. The suggestion by Politicians is that COVID-19 is now notifiable and as such business interruption cover applies or that now they have ordered you to close you may have cover is very misleading.
This is a review of our Top 6 suppliers for Business combined Contracts typically issued to Mid-Size businesses.
Notifiable Disease cover
The typical cover provides loss of gross margin on the reduced turnover suffered by the business for a maximum of 12 weeks. This is subject to the disease being identified and reported to the EHO at your premises and the EHO shutting the premises or in some wordings, premises within the vicinity.
Insurers that don’t automatically give Notifiable disease cover other than for hospitality businesses are:-
It is interesting that SARs was added to this list of Notifiable Diseases by the Government as the last potential Viral pandemic, however, Insurers did not follow by giving cover for SARS and indeed switched to a specified list of diseases for clarity.
The list from the Health Protection (Notification) Regulations 2010 versus what is covered by respective insurers is as follows
|Axa Cover||Aviva Cover||NIG Cover||Complete List|
|N||N||N||Acute infectious hepatitis|
|N||N||N||Haemolytic uraemic syndrome|
|N||N||N||Infectious bloody diarrhoea|
|N||N||N||Invasive group A streptococcal disease|
|N||N||N||Severe Acute Respiratory Syndrome (SARS)|
|N||Y(Specified)||Viral haemorrhagic fever (VHF)|
No change – No Cover
No policies on a ‘Specified’ basis feature Corvis-19 as a specified disease, (We have so far come across only one policy wording with Hiscox that still uses the old wording of ‘Any Notifiable infectious disease’, although the cover is very limited) so making the disease notifiable, simply puts an onus on the employer to provide details to their local EHO.
Public Emergency or Prevention of Access/Denial of Access cover
Most package policies also include an additional extension for prevention of access to your premises or other premises within the vicinity of your premises due to ‘damage’ but this is of no use with Corvid 19, as no damage has occurred. Some Insurers also provide cover for closure or denial of access by a Local Competent Authority or National Government; however, they tend to exclude action due to infectious or contagious disease. For this cover to operate, even if the infectious disease cover is not mentioned, you would still need to be ordered to close by the appropriate authority. Obviously, the Government has ‘requested’ that everybody who can, should work from home, but they have only ‘ordered’ certain businesses to close their shops, pubs, restaurants and hotels. We have tested this extension with certain insurers and thus far they are still refusing policy indemnity (with only one report of an insurer accepting claims on a small Nursery Scheme through Covea, again with a very low limit).
Pandemics – Fundamental risks
To the best of our knowledge, there is no such thing as ‘Pandemic Cover’ and if there is, we are not aware of who underwrites it. The principle of Insurance is to cover ‘the risk of the few, spread amongst the many’. Insurance policies are set up to provide cover for defined risks and not fundamental risks like Pandemics and War. Insurers do not have reinsurance for such global events as this and as such we don’t believe any cover is available for business interruption under the majority of commercial policies arranged.