How could Coronavirus affect Reading Businesses
Coronavirus has the potential to cause wide-spread disruption to global and local supply chains. Disruption may result either from actual viral infection, or from measures taken to prevent the spread of the virus such as quarantine requirements, forced business closures, movement restrictions and local or regional lockdowns.
Such disruption is not due to issues traditionally covered under core insurance covers such as material damage and business interruption. Specialist covers such as trade disruption insurance (normally available only to those involved in global supply chains) and particularly specialist pandemic risk coverages (targeted at select global industries such as travel and tourism) have not traditionally been aimed at the manufacturing and / or logistics sectors.
- Material damage policies focus on loss or damage to tangible, predominantly static, physical assets (premises, machinery, tools and stock)
- Business Interruption policies principally respond to losses arising from loss or physical damage to assets (and hence the ‘material damage proviso’ requiring there to be material damage cover in place for business interruption cover to respond)
- Where business interruption cover has been extended to cover, for example, denial of access to the insured’s premises, such extensions typically exclude denial of access caused by contagious or infectious diseases.
- Business interruption notifiable disease extensions are typically available to the likes of hotel proprietors. Cover is normally restricted to outbreaks at the premises and to losses at the premises, the disease must have been deemed notifiable by the Government (Coronavirus is now ‘notifiable’) and the policy may restrict ‘notifiable diseases’ to food poisoning which means a hotelier with such an extension may still find they are unable to pursue a coronavirus claim.
- Liability policies principally provide cover for negligence. A business that fails to take reasonable precautions in the face of a clear and present coronavirus threat may one day be found negligent leading to a claim under their liability policy. Such, albeit vital, coverage will not alleviate a potentially substantial reduction in turnover or revenue resulting from a coronavirus pandemic.
- Group Personal Accident and Illness policies may provide some financial relief for affected employees, depending on whether the coverage is wide enough to cater for the likes of coronavirus, but again will not address any marked drop in turnover or revenue.
- Those hoping to claim under a travel insurance policy, most likely for cancellation or emergency medical expenses, may find their coronavirus claim excluded, particularly if purchased after 30 January, you travel against Foreign and Commonwealth Office advice, or you wish to cancel for precautionary reasons. Check your policy wording carefully.
What the coverage issues summarised above point to is the need to proactively embrace the concept of risk management.
Due to the sometimes insidious, seemingly indiscriminate, nature of global pandemic outbreaks such as, potentially, coronavirus, businesses of virtually every description need to begin by asking themselves what would happen to their businesses, what business continuity measures they need to consider, and most importantly what measures they need to take to protect their most precious asset – their workforce – against the threat of coronavirus.
Given the uncertainties surrounding coronavirus at the time of writing, asking themselves what would happen to their businesses means envisaging:
- Their own premises being forcibly closed.
- Their staff being forced to self-quarantine or suffering actual viral infection.
- Vital warehouses, distribution centres and ports being either closed or out of reach due to transport restrictions and area or regional lockdowns.
- Key road, sea, air and rail links on which the business depends being closed or curtailed.
- The knock-on effect of key customers and / or suppliers being severely affected by a coronavirus outbreak
- Perishable goods deteriorating due to logistical delays
- Just-in-time deliveries arriving late or not at all
- The consequences of being unable to meet binding contractual obligations
At the same time, it is vital that employers take all reasonable measures to help their teams stay fit and well. Keeping up to date with and most importantly acting upon, instructions and advice coming from Government departments is essential.
Key information can be found here:
https://www.gov.uk/government/publications/ guidance-to-employers-and-businesses-about-covid-19/ guidance-for-employers-and-businesses-on-covid-19
International businesses need to carefully consider the issues around sending their staff abroad:
- Is travel abroad essential and if yes, what is the safest way to go in order to minimise the risk of infection?
- Might a video conference be more prudent?
- Have staff been fully informed about the potential risks they face and the measures they should take to manage the risks?
- Have you developed a contingency plan should staff find themselves abroad with a journey plan no longer viable for operational or safety reasons?
Those with international operations can find further information here:
Information about holiday travel insurance issues relating to coronavirus can be found here https://www.abi.org.uk/ products-and-issues/topics-and-issues/coronavirus-qa/
Please note, the information provided is wide-ranging however, if you wish to discuss your specific concerns please contact your usual Towergate Insurance Brokers Advisor or email: TIB@towergate.co.uk