What insurers in Asia should be considering in the face of the Ebola threat

The comments this month from the head of the UN Ebola response mission in West Africa that there is still a huge risk the disease could spread to other parts of the world serve as a warning to insurers that they cannot afford to simply await developments. If Ebola does spread, recent events involving the deadly disease demonstrate that even isolated events could trigger insurance claims and coverage disputes.

Liability claims

The healthcare sector and employers

Insurers that provide coverage to the healthcare sector are particularly exposed to litigation. The cases of nurses in Spain and the United States who contracted the disease after treating patients outside Africa serve as a warning that many different parties could be dragged into litigation. The claimant population could include members of the public, patients and hospital employees. 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 Ebola-specific protocols, hospitals if they do not train staff to respond to an Ebola case or individual doctors who do not spot symptoms.

If there is litigation, insurers may find that it is difficult to resolve due to the unique challenges presented by Ebola. A hospital has a duty of care to protect its staff, patients it treats and, potentially, members of the public who visit the hospital. A claim against a hospital or doctor will hinge upon determining whether the defendant was in breach of that duty of care. However, determining the standard of care could prove difficult as healthcare agencies across the world continually update their protocols for dealing with the disease. As the case of the “Ebola nurse” in the United States shows (see box), the standards healthcare agencies must adhere to are not clear-cut.

It is not just employers of hospital staff that could be exposed. Employers could potentially be liable if they send an employee to an area where the risk of contracting Ebola is high. Both the employee, and any other members of the company who are infected by the employee, may seek to bring claims against the company.

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.

The ‘Ebola nurse’: the shifting duty of care

Kaci Hickox had worked with Ebola sufferers in Sierra Leone. On her return, the State of Maine attempted to quarantine Ms Hickox for the 21-day incubation period for Ebola. Ms Hickox successfully brought a legal challenge against the state, arguing that she did not need to be quarantined as she showed no symptoms.

The judge ruled: “The state has not met its burden at this time to prove … that limiting [Hickox’s] movements to the degree requested is necessary to protect other individuals from the dangers of infection.

Before the ruling, a member of the public might have attempted to bring a claim against Maine by arguing it had breached its duty of care by not enforcing quarantine orders against healthcare workers. Following the ruling, healthcare authorities in Maine and elsewhere can point to this case to argue that a government’s duty of care does not always extend to quarantining healthcare workers.

Manufacturers

It is not just hospitals that could face litigation in the event of an outbreak. 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 (see case study) to pinpoint where failures occurred and who was to blame.

Insurers of manufacturers and suppliers of protective equipment should ask their insureds to stress-test the guidance and disclaimers that accompany the equipment. These documents need to be updated to ensure that they are easy to understand, track the current state of knowledge on the ways Ebola can be transmitted and guarded against, and clearly spell out how the equipment is to be used.

Case study: failure of protective equipment

  • A hospital places an order for protective clothing, in case it needs to treat Ebola patients
  • The supplier sources the clothing from a manufacturer. The manufacturer tells the
  • supplier the clothing has been tested against ‘almost all known infectious diseases’
  • The hospital receives the equipment, along with the manufacturers’ manual explaining how the equipment is to be used
  • The hospital rewrites the manufacturers’ guidance, to make it more understandable by its staff, and provides the staff with training based on the new guidance
  • The hospital receives 24 hours’ notice that it is to receive a dozen nurses from Sierra Leone who may have been infected with Ebola
  • The nurses arrive, all displaying symptoms
  • Extra staff are drafted in to cope with the Ebola cases. Some staff did not attend all the training sessions
  • A doctor whose protective clothing fails, as well as member of the public who comes into contact with him, are both infected by Ebola and sue the hospital
  • The result: failures by the manufacturer (did not refer to Ebola in its materials), the supplier (did not stress-test the manufacturers’ manual) and the hospital (rewrote the guidance, did not train all staff) mean that they are all dragged into litigation

Coverage

Even if only limited cases of Ebola ultimately occur in Asia, the supply chains of companies with insurance cover written in the region could be 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 Ebola in a particular jurisdiction.

Typical business interruption policies are triggered by property damage, meaning that coverage is unlikely to be available if interruption is caused by Ebola. However, the business interruption threat posed by Ebola can be met by including “notifiable disease” extensions in policies, which can be triggered by government orders (including to close business premises).

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.

The London market has shown demand for policies tailored to cover the risks posed by Ebola, eg:

  • loss of income following government orders to close businesses where there is an outbreak of the disease
  • quarantine insurance for the shipping industry
  • insurance against the costs of mandatory evacuation of premises

Businesses in the Far East may also seek this protection from their insurers as the situation develops.

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 Ebola.