The World Health Organization (WHO) has called Zika an international public health emergency. The insurance industry is taking notice. Civil authorities have already begun to issue notices, like the Center for Disease Control’s travel notices for areas in which Zika transmission is occurring. As highlighted by Marsh in a recent blog post, the potential for action by civil authorities can create problems for some policyholders.1
Some property policies provide coverage for lost income due to actions taken by a civil authority. However, that coverage may require that the civil authority action lead to lost income due to physical damage to property. The potential civil authority actions for Zika will likely not involve any physical damage to property and may instead take the form of travel bans. While such a ban appears unlikely, if one were imposed for travel to Brazil this summer, the resulting losses to the travel and hospitality industries could be significant in light of the 2016 Summer Olympics in Rio de Janeiro. Although such losses may not be covered under civil authority coverages (depending on the actual circumstances and applicable policy provisions), they may be covered under all-risk property policies, particularly where the language of the policy affords coverage for loss caused by a peril not excluded in the policy, rather than physical damage to property.
Relatedly, travel insurers are already seeing Zika-related effects. One of the top US travel insurers, RoamRight, told Reuters that sales of its Cancel For Any Reason policy surged 81 percent in January as compared to last year for travel to “Zika-impacted areas in the Americas.”2 Allianz Global Assistance has reportedly received 100 Zika-related claims.3 Travel agents’ errors and omissions coverage could see similar impacts. According Travel Weekly, a travel industry lawyer advises that travel agents should warn travelers about Zika, given agents’ duty to inform clients about potential risks known to the agent but not generally known to travelers.4 If the failure to issue such warnings leads to claims against agents, travel agents’ errors and omissions policies may be impacted.