The government plans to fly 200 Brits home from Wuhan today and quarantine them, insurers need to take a joined up approach to navigate losses 

Law firm, RPC has revealed the legal risks of the Wuhan coronavirus for insurers as the UK government warns that the country is unlikely to escape a “rapidly developing” global outbreak.

The biggest threat now to the insurance industry, RPC said, is the sheer scale of the risk because of experience from previous outbreaks of new diseases show that even isolated events can trigger litigation, insurance claims and coverage disputes.

And the coronavirus’ relatively lengthy incubation period of 10 to 14 days allows infected individuals to travel around the world, unknowingly spreading the disease while appearing to be healthy.

It follows the news that Brits returning from Wuhan in China will be quarantined at a military base for up to two weeks under the health secretary Matt Hancock’s instructions.

The government plans to fly 200 Brits out of Wuhan on Thursday 30 January, but Hancock said that “public safety is a top priority”.

A serious global outbreak, could therefore expose insurers to claims concerning medical products or clinical staff in multiple jurisdictions.

Peter Rudd Clarke, legal director at law firm, RPC said: “Insurers that provide coverage to the healthcare sector may be particularly exposed to litigation. Healthcare workers in China have contracted the disease after treating patients. This serves as a warning that healthcare workers in the UK may contract the disease if an outbreak of the virus occurs in the UK.

”Insurers would want to assemble legal teams to take a joined-up approach towards resolving disputes around the world, possibly in circumstances where governments and regulators are behind the curve.”

But due to the fast moving spread of the virus, authorities could lack full understanding of a disease and increase the risk of litigation.

Therefore, claimants could range from members of the public, patients and hospital employees that are affected.

“Where a member of the public visiting a hospital, or a nurse treating a patient, is infected, claimant lawyers may see opportunities to bring claims against hospitals, doctors and health agencies.

”Any number of parties could be targeted by claimants, for example: government agencies if they do not implement coronavirus-specific protocols, hospitals if they do not train staff to respond to a coronavirus case or individual doctors who do not spot symptoms,” he said.  

Unique challenges

Meanwhile for litigation, insurers may find that it is tricky to resolve due to unique challenges presented by the coronavirus.

For example, a hospital has a duty of care to protect its staff, patients and member of the public that visit therefore a claim against this kind of establishment will depend upon determining whether the defendant was in breach of this.

But proving the standard of care could prove difficult as healthcare agencies’ protocols are continually being updated with the disease. In the early stages, these standards are not clear-cut.

Employers could also potentially be liable if they send an employee to an area where the risk of contacting the coronavirus is high. This could lead to the employee and other company members that are infected to bring a claim against the firm.

Rudd Clarke added: “Insurers of healthcare agencies, doctors and hospitals, as well as businesses operating in areas of high risk, should be asking their insureds what plans they have in place to limit their exposure to potential litigation.”

Insurers of manufacturers and suppliers of protective equipment are also at risk of litigation, they should ask insureds to stress-test the guidance and disclaimers that accompany equipment.

“If protective equipment fails, leading to cases of infection, hospital staff and members of the public could bring claims against manufacturers if the equipment was poorly designed or the manuals accompanying the equipment were not fit for purpose.

“But hospitals would not escape liability if protective equipment failed because they did not provide adequate training to their staff. Litigation where equipment fails is, therefore, likely to focus on the chain of causation to pinpoint where failures occurred and who was to blame,” Rudd Clarke said.

Documents need to be updated to ensure that they are easy to understand, track the current state of knowledge on the ways the coronavirus can be prevented and spread, as well as outlining how the equipment is to be used.

Supply chains

Supply chains could also be affected. 

Rudd Clarke, continued: ”It appears that supply chains of companies in regions linked to China will be particularly affected. Insurers should be prepared to handle enquiries to endorse policies with extensions for infectious diseases.

”Businesses with a high volume of customer flow through their premises, such as restaurants, hotels, shopping centres, gyms, airports, and hospitals could be particularly affected by any outbreak of the coronavirus in a particular jurisdiction.”

This he said is because ”typical business interruption policies are triggered by property damage, meaning that coverage is unlikely to be available if interruption is caused by the coronavirus.

”However, the business interruption threat can be met by including ‘notifiable disease’ extensions in policies, which can be triggered by government orders (including to close business premises)”.

Policy drafting 

Rudd Clarke added that there has been much talk on the parallels between the coronavirus outbreak and the SARS outbreak of 2003, showing how crucial the drafting of a policy is. 

”The coverage disputes that arose following the SARS outbreak in 2003 show that clarity in policy drafting is crucial. Disputes concerned whether SARS was a “notifiable” disease, at what point the disease became “notifiable” and whether coverage was available where governments established mandatory, as opposed to voluntary, regimes to cope with the disease.

”Insurers may wish to consider tightening up their policy wordings to limit the prospects of coverage disputes, as well as exploring the market’s appetite for coverage specifically focused on the risks posed by infectious diseases.”