When Pigs Fly
Your business or client may not be
covered for a swine flu pandemic. It’s time to get your
house in order for the expected surge.
The 1918 Spanish flu killed an estimated 50 million and
possibly more—a global disaster. But, like many
influenzas, it started out mild and built strength as it moved
around the globe.
Today we’re facing a threat from H1N1, the so-called
swine flu, which is flying across country borders faster than a
SR-71 Blackbird. H1N1 is actually a combination of seasonal,
swine and avian flu—a potentially lethal combination.
In case you skeptics aren’t convinced, health experts
warn it’s not a matter of if we will be hit by another
deadly pandemic, it’s a matter of when. As former U.S.
Health and Human Services Secretary Mike Leavitt says,
“Let’s acknowledge that anything we say before a
pandemic occurs feels like an exaggeration—feels
alarmist. But anything said afterwards, it shows a lack of
Outside of Mexico, the strain hitting the U.S. and other
nations seems to be mild, but come fall, the virus could return
with a vengeance.
Elizabeth Demaret, managing director of Arthur J. Gallagher,
says health officials are closely watching what happens in
South America and other southern hemisphere countries as they
head into the height of the flu season—fall and winter.
That experience will help health officials gauge the
If a pandemic strikes, it will affect every aspect of our
lives. While we all will need to take precautions, businesses
particularly need to prepare for the potential widespread
disruptions a pandemic could cause. What do you do if large
numbers of workers fall ill or even die, if customers stop
coming, if supplies are blocked at the border, or if public
officials mandate closures?
There are a number of workplace insurance and liability
issues at stake. Unfortunately, insurance may not apply to
specific situations resulting from a pandemic, so risk managers
need to know what their policies cover and what is excluded.
Brokers can help assess the risk and develop a plan to protect
the business and workers.
Business interruption: A
pandemic could cause widespread disruption to business from
sick workers, a lack of customers and closure. But business
interruption insurance may not cover the losses. Business
interruption insurance is designed to cover the loss of income
incurred if normal business operations are disrupted or halted
by damage to property. Most policies exclude losses due to
contamination and pandemics. It’s questionable if there
is coverage if the government mandates closures.
Workplace liability: If
workers fall ill from the flu, the major workers compensation
question will be whether they were infected on the job. If the
flu is widespread, it may be difficult to determine the source
of contagion. Travel to highly affected areas may raise other
liability issues. Employers may have a legal obligation under
the Occupational Safety and Health Act to take steps to protect
the health of employees traveling to high-risk areas.
OSHA’s “general duty clause” requires
employers to provide a workplace “free from recognized
hazards that are causing or are likely to cause death or
serious physical harm.”
There may be exposure depending on how companies respond to
an outbreak in the workplace and on an employer’s
obligation to protect workers. Some of the questions are: Did
the company fail to act reasonably to protect workers and did
the company take reasonable steps to identify and contain the
exposure. D&O claims could also arise regarding how
companies respond to a flu outbreak in the workplace and
whether conduct causes financial damage to the firm. Employers
should also check federal and state employment and
Supply chain and trade
disruptions: Many businesses rely on suppliers to stay
in business. An interruption in the supply chain, including
border closings and trade restrictions, could seriously damage
a business. Coverage options are limited. Trade disruption
insurance could offer some limited coverage. Businesses should
talk to suppliers to find out their contingency plans in the
event of a pandemic.
In addition, Demaret says, it’s very important to get
the human resources department involved early on. A company
should have clear internal policies and procedures on how to
respond to a pandemic. Those should include policies for leave
of absence due to sickness, paid time off, vacation and
disability. Other support services can include mental health
resources to help employees during the crisis.