The 2009 swine flu (now referred to as A/H1N1 flu) outbreak has developed into one of the most significant public health challenges in the last few decades. More than 1,200 cases of the virus have been reported in 18 countries worldwide.
Researchers have only tentative answers regarding transmission and mortality. Public gatherings have been discouraged in Mexico; some schools have closed in the US; and a hotel in China quarantined 300 guests overnight when one person was suspected have having the flu. The situation changes daily.
While not officially considered a pandemic, the A/H1N1 outbreak is already having a serious impact upon many aspects of the world economy. The insurance industry also may face significant liability from this outbreak in the months to come. Indeed, experts have estimated that even a moderate outbreak of the A/H1N1 flu will lead to more than $31 billion in claims paid by life insurers, while a severe outbreak (similar to the 1918 "Spanish Flu" pandemic that is estimated to have caused 50 million deaths worldwide) would result in approximately $133 billion in life insurance claims.
- Workers' Compensation Infections with the A/H1N1 flu virus may lead to an increase in workers' compensation claims asserted by individuals employed in fields with a higher risk of exposure to the virus, such as the health care industry. Workers' compensation claims may also increase in any industry in which employees regularly come into contact with potentially infectious individuals, such as elementary education, travel/hospitality, and the retail industry.
- Life and Health While flu viruses typically result in serious illness only in the very young and very old, the A/H1N1 flu virus has had an unusually serious impact upon young adults. Therefore, health insurers that primarily issue coverage as part of employee benefit plans may face a particularly substantial exposure to losses arising from swine flu infection. Life insurers may also face significant liability on otherwise low-risk policies issued to healthy individuals for which comparatively low premiums have been charged.
- Travel Insurance Recent travel warnings, as well as extensive media coverage regarding the swine flu outbreak, have led to widespread cancellations of planned vacations. As the outbreak continues, these cancellations will result in significant exposure for travel insurers that provide coverage for the cost of ruined vacations. Depending upon the terms of the policies at issue, travel insurers may also be responsible to pay for medical expenses incurred by policyholders who have developed symptoms of swine flu infection while traveling. Furthermore, travel insurance policies may also provide coverage for expenses incurred due to the quarantine of policyholders.
- Business Interruption Widespread absences by infected employees may render it virtually impossible for a business to operate for a prolonged period of time. Indeed, analysts have predicted that in a worst-case scenario, the swine flu outbreak could result in up to 75 percent of the workforce being absent at the peak of the crisis. Businesses may attempt to recover these losses by bringing claims under business interruption policies. Whether coverage is available under such policies will likely be the subject of significant dispute, and resulting litigation.
- Event Coverage A widespread A/H1N1 flu outbreak may also lead to the cancellation of numerous public events. In fact, since the onset of the swine flu crisis, numerous significant soccer matches have been played without spectators. This kind of reaction to the outbreak may lead to significant exposure for carriers who have insured these events against cancellation.
- Commercial General Liability Claims These claims may be brought against common carriers such as airlines, bus services, and cruise lines, on the grounds that these carriers failed to effectively screen against passengers infected with the virus. Claims could also be brought against food producers for failing to take precautions to prevent the spread of swine flu from infected livestock to the general population.
- Livestock Insurance At the present time, there is no indication of an increase in mortality among livestock with regard to the current swine flu epidemic. However, if the current health crisis ultimately has a substantial impact upon livestock, claims may be asserted under livestock insurance policies, although many of these policies exclude coverage for diseases.
