In response to the widespread fear of Ebola, at least one insurance company is seeking to protect itself from potentially significant financial loss in the event Ebola continues to spread beyond Africa by adding Ebola-specific exclusions to property and casualty policies. At the same time, many corporate policyholders are taking steps to prevent human and financial loss in the event Ebola continues to spread.
Although many scientists and medical experts continue to predict that there will not be a widespread outbreak of Ebola beyond Africa, insurers and corporate policyholders who would stand to suffer significant losses if the worst-case scenarios became reality are playing out the "what-if" scenarios in anticipation of a potential catastrophic financial loss. One of the leading global property and casualty insurers, ACE Ltd., has begun adding an Ebola-specific exclusion to prospective coverage. ACE CEO Evan Greenberg stated during a recent conference call with analysts that adding the exclusion is "normal, common sense" underwriting and business practice, and that ACE is "using it selectively, not indiscriminately or unilaterally" to address perceived risks "based on information about each company's travel to and operations in select territories." (Insurance Journal, "ACE's Greenberg Says TRIA Inaction 'Shameful'; Defends Ebola Underwriting," 10/22/14.) Among those identified as being at risk are hospitals and medical professionals, energy and commodities firms, media businesses, nongovernmental organizations, and religious groups.
ACE is just the first insurer to adopt and apply an Ebola-specific exclusion to corporate property and casualty policies and it is expected that other insurers will follow in ACE's footsteps to adopt similar exclusions. As such, many corporate policyholders should expect their insurer, during underwriting or renewal, to seek to prospectively apply Ebola-specific exclusions to their property, casualty, and perhaps other lines of coverage, including those companies with operations in and/or employees traveling to countries affected by the Ebola virus. For these reasons, it remains imperative for corporate policyholders across all potentially affected industries to evaluate their existing coverage and to be on the lookout for Ebola-related exclusions being prospectively added to their policies.
The potential implications of Ebola remain unknown but the risk is real. Therefore, it is not just the insurers, but also corporate policyholders, who are ramping up their efforts to prepare for and prevent possible losses in the event Ebola continues to spread. For example, hospitals, medical clinics, and community health centers are implementing safety and treatment procedures based on the Ebola guidelines promulgated by the CDC. Many businesses, particularly in the travel and medical care industries, are preparing and implementing contingency plans in the event they are forced to shut down business as a result of exposure to Ebola. Several U.S. airports where planes from affected African countries fly direct, including one of the country's largest – O'Hare International Airport – have been instructed by the federal government to implement screening procedures to detect possible cases of Ebola. Businesses across the world that conduct business in affected African countries and whose employees travel to affected areas are considering how to minimize the impact on operations while protecting the health and safety of their employees. One way to do so is by paying careful attention to what is covered – and what is excluded – under their insurance policies.
Reed Smith's global Insurance Recovery Group can work with corporate policyholders to evaluate existing coverage for Ebola-related losses, identify gaps in current coverage, and work with companies and their brokers to get the right insurance coverage in place and negotiate any attempt to add Ebola exclusions to coverage.
This article is presented for informational purposes only and is not intended to constitute legal advice.
