Ebola and insurance: A complicated mixture

Multinational corporations and nongovernmental organizations that operate at the epicenter of the Ebola epidemic in West Africa as well as U.S. health care facilities are scrambling to make sure they have adequate insurance coverage against the deadly disease.

However, insurers such as ACE Ltd. (ACE), one of the world's largest, are starting to issue riders or endorsements on policies limiting or in some cases excluding from coverage any activities in the countries affected by the deadly disease. Ebola has killed 9,000 people so far, mostly in Africa.

According to a statement from Zurich-based ACE, its global casualty unit, which provides coverage for U.S.-based companies and organizations that operate overseas, is applying the endorsement during the underwriting process on a case-by-case basis to new policies and renewals.

"It is not being applied in any indiscriminate, unilateral or blanket way to address the Ebola risk," according to ACE.

Insurance companies are using the exclusions only when they aren't getting satisfactory answers from their clients about how they're limiting Ebola risk, according to Logan Payne of insurance brokerage and risk-management advisory firm Lockton. He hasn't seen rate increases because of the disease.

"We only had only one client who had the exclusion," he said, adding that he was able to convince the insurance company to drop it.

The Ebola epidemic has killed just one person in the U.S., Thomas Eric Duncan, and sickened two nurses who cared for him and a doctor who treated infected patients in Africa. Payne said one of the issues that insurance companies haven't figured out is whether people who are quarantined can get workers' compensation.

Demand for insurance coverage from U.S. hospitals and other health care facilities has also increased because of Ebola, but coverage costs vary widely depending on the size of the facility, according to Peter Reilly of brokerage William Gallagher.

Insurance demand remains robust, although it has tailed off somewhat after the initial flurry of interest when the epidemic first made headlines, he said. Reilly added: "There's a lot of fear of the unknown."

The disease, which has a fatality rate of about 70 percent, shows no signs of slowing. Projections from catastrophic risk-management firm RMS estimate there may be 1,400 new Ebola cases daily within the month. If that happens, the epidemic would be the worst in the world since the 1918 flu outbreak.

"Controlling the spread of this Ebola outbreak is more a question of logistics than virology," said Dominic Smith, pandemic risk expert and senior manager of LifeRisks at RMS, in a press release. "The fight against the Ebola epidemic is a race against a moving target; more resources are required as the number of cases increases."

Ebola presents companies and organizations with many challenges including risk of employees getting sick and interruption of normal business activities. Insurance companies are advising clients to use alternative production facilities outside the Ebola zone, if that's possible. However, oil and mining companies operating in West Africa can't afford to leave, and humanitarian organizations operating there don't want to abandon the region either.

"They don't want to have to pack up," said Dr. Robert Quigley, senior vice president of medical assistance at International SOS, a medial and travel security company, adding that some companies, academic groups and nonprofits that left the Ebola zone at the start of the epidemic "are now starting to come back."

Quigley declined to discuss specific clients, though he did note that his company was advising them to develop contingency plans to deal with the disease.