Yesterday, the Australian Government included H1N1 influenza (“swine flu”) as a quarantinable human disease as per the Quarantine Act 1908 (Cth). This has implications under many insurance policies.
This Government action was taken on the advice of the Chief Medical Officer, Professor Jim Bishop.
Making swine flu a quarantinable disease ensures that the federal government has the power to take appropriate emergency actions to prevent or control the spread of disease.
The vast majority of business interruption insurance policies that provide cover for disruption to the business arising from infectious diseases, also contain an exclusion for losses arising from a disease that is notifiable under the Quarantine Act 1908 (Cth). A sample of such an endorsement is reproduced below:
"Infectious or Contagious Diseases; Vermin, Pests or Defective Sanitary Arrangements; Food or Drink Poisoning; Murder, Suicide (A)
The issue is, a serious outbreak could affect the already weakened Australian economy to the point that the accumulated losses are so great, the insurance industry does not have the funds to pay the claims.
Insurance is only one form of risk management and business owners are encouraged to consider their own risk management plans and review their Business Continuity Plans. Tools such as LMI ContinuityCoach are available for insurance brokers and business owners to develop and keep their Business Continuity Plans up to date.
LMI Group’s Dr Allan Manning has prepared a white paper on the issues surrounding pandemics and a copy can be obtained by emailing firstname.lastname@example.org.