Home > Property & Casualty > Avoiding loss and business interruption during a pandemic

Avoiding loss and business interruption during a pandemic


For organizations with businesses in areas of the world with a higher risk of pandemic, particularly West Africa, contingency planning is a crucial element.  While there are certain industries that are more predominantly impacted, all businesses which rely on raw materials and commodities can be affected. The most important thing for Risk Managers to focus on during a pandemic is that companies must maintain  “business as usual” conduct, while at the same time taking a realistic approach to addressing concerns about the situation and its potential impact on the organization. This requires identifying exposures at home and abroad so that ongoing business is minimally impacted.

The proper risk management approach, combined with an awareness of the types of insurance that may be able to address the exposures associated with a pandemic, will allow an organization to protect the well-being of its employees while at the same time protecting its revenues and assets.  Below is a list of recommended actions that every organization should consider to reduce their risk of loss and avoid an interruption in their business operations:

Remain Informed:

It’s important for key personnel to remain on top of developments and announcements made by critical organizations involved with pandemics.  Websites for the World Health Organization and Center for Disease Control should be consulted regularly to ensure that actions do not violate any international healthcare laws/standards.

Ensure Employee Safety & Well-Being:

Companies need to take measures to protect the health and safety of their employees and volunteers.

Establish Protocols:

Businesses that provide medical assistance, such as hospitals, nursing homes, medical clinics, and physicians’ offices, hold a greater degree of responsibility to the general public for having proper protocols in place. These protocols must be communicated to their employees as a method of preparedness. Employees should carefully review protocols relating to vendors that come to their premises regularly for pickup and delivery products associated with the operations of medical facilities.

Use Insurance:

In the event the need arises to evacuate an employee or provide emergency/ routine medical care, insurance is a valuable tool for mitigating costs and coordinating the often complex logistics associated with providing essential care. Coverages that should be considered are:

  • Business Travel Accident
  • Health Insurance
  • Workers’ Compensation

When evaluating insurance, pay particular attention to policy exclusions that limit coverage for the employer:

  • The Employer’s serious and willful misconduct
  • The Employer’s failure to comply with health and safety laws and regulations

Such exclusions would apply to additional benefits that the Employer may be required to pay as a result of such willful misconduct or failure to follow safety guidelines. The State required benefits should still be paid by the policy. Employers should also be aware that exposures for pandemic-type illnesses may lead to Employer Liability claims by workers’ families with allegations of the Employer’s negligence which lead to the contraction of the disease.

Address Business Continuity:

Organizations need to activate Business Continuity Plans when faced with a potential interruption in their operations due to pandemic-related issues.

It’s critical to understand your insurance and how it may respond to a pandemic.  As an example, these are 2 common exclusions found in General Liability policies:

  • Expected or Intended Injuries – Carriers may argue that any prudent person would have known there was an increased exposure to Ebola and could try to deny coverage
  • Pollution – Pollutants are defined as any solid, liquid, gaseous, or thermal irritant or contaminant, including waste. This exclusion is typically very broad and in many cases depends upon case law in determining what is considered a pollutant. Carriers may say that there is an exclusion for Bacteria related events; a virus is different in that it includes DNA or RNA in its genetic makeup.

Consider Environmental Liability Insurance:

Since most General Liability Policies exclude or limit any kind of Pollution Exposure, many businesses have taken out separate Environmental Liability Policies.

Address Director’s & Officer’s Liability Concerns:

Directors and officers can anticipate possible shareholder suits in the event companies are inadequately prepared to deal with a pandemic that hurts the company’s business.

Businesses need to evaluate their exposures and determine if the current risk management approach is sufficient to address their risk.  This requires a careful review of the operations and the insurance program in place to determine what insurance will cover and to identify and analyze what other risk management alternatives are available.  WGA is ready to assist our clients in creating the proper awareness and action plans.

About the Author

Tina HinckleyTina Hinkley is an Area Senior Vice President at Gallagher WGA with over 30 years of insurance industry experience. She works with multinational manufacturing, life science and high technology companies to, design and maintain multinational programs, and provide well-rounded risk management solutions. 

617.646.0216 | THinkley@wgains.com |

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