Draft Technical Note – Swine Flu (Influenza A H1N1 virus)

Mindful of the potential for claims to be submitted on the occurrence of an outbreak of Swine Flu, the following guidance has been issued to ensure consistency in the approach of members generally.

This extension is commonly required for specific sectors of the economy – Food and Drink being a prime example – rather than being a core cover for all. Many businesses will not have, and are unlikely to need, this extension.

All Risks covers will not respond to Notifiable disease outbreaks in the absence of the extension. They will still be dependent on Damage. The outbreak of disease will not constitute Damage.

Notifiable Disease Extension

1. Swine Flu is not currently a Notifiable disease and an outbreak will not therefore trigger claims.
2. Definitions of what is Notifiable and what is not vary between policies. Some policies list the diseases that meet the definition at the point that the policy is issued and there is no ambiguity over what is covered and what is not.
3. Other policies refer to the lists maintained by (competent) local authorities which are accessible over the internet. Swine Flu is not currently featuring on those lists. Should the position change, and should swine flu become Notifiable, policies with this wording may respond (potentially in contrast to those with a fixed list of diseases from inception).
4. The Health Protection Authority recommends that consideration be given to closing premises if there is an occurrence/suspected occurrence of swine flu (for a suggested 7 days), but this is guidance and not a requirement.
5. The ‘NHS Pandemic Flu Guidance for businesses’ download (available via www.direct.gov.uk) focuses on management of individuals and hygiene in the work place. It does not include any discussion about closure of businesses as a whole.
6. If swine Flu becomes Notifiable, cover would typically trigger following an outbreak at the premises or within a stipulated (often 25 miles) radius of the premises.
7. Should cover be available, care would still need to be taken in respect of the calculation of quantum. Reference is made to the flooding note available on the CILA website, which differentiated between loss resulting from flooding at the premises and loss subsisting because of flooding in the general area. The point was made in respect of flood damage that even if a retail shop in the Meadow Hall Shopping Centre for example was not flooded in June 2007, turnover would have been down because the premises of the customers were all flooded.
8. On a consistent basis, it would be necessary to differentiate between any downturn in business caused by a trigger outbreak of a Notifiable disease either at the premises or within the stipulated distance from it as opposed to loss arising from a general disinclination to travel on the part of the public and an impact on turnover because of events away from the premises (and outside the radius distance catered for in the policy). This “wide area impact” would not form part of any loss payable under the policy wording as any downturn that it caused would have been experienced regardless of an outbreak triggering policy cover.

Denial/Hindrance of Access Extension

1. The Denial of Access extension requires Damage in the vicinity which causes a (physical) hindrance or denial of access to the Insured premises.
2. The extension can itself be extended, to include a hindrance or denial of access resulting from the instruction of the police or other authority stipulated in the policy (without the requirement for damage).
3. It is conceivable, should this virus spread exponentially, that some Insureds could be denied access to their premises and cover could trigger in this respect. That is unlikely at current levels of contagion. The comments about quantum above refer – widespread infection could already have affected profitability; only the additional loss arising from hindrance or denial of access to the premises would fall for consideration.

Likewise, where the intention of the parties is not fully reflected in the policy wording, guidance from instructing principals should be taken.