As the Ebola outbreak dominates world headlines, few discussions have addressed the potential economic impact and what steps companies should take to mitigate their financial risk. Consider the following exposures:
Already, global supply chains have been affected by port closures and heightened concerns through custom agencies around the world. Brazil, Argentina and the United States are closely scrutinizing all ships that have sailed from West Africa, according to Reuters this week.
Businesses who import goods from West Africa could face delays in receipt of raw materials, as well as rising costs in these goods, resulting from international ports tightening their entry procedures or temporarily closing ports of entry, resulting in increased shipping costs and compounding delays.
Ship owners and charterers could face substantial losses from quarantined vessels. With an incubation period of three weeks or more, crew members and cargo suspected of shipping Ebola could be held captive indefinitely. Standard marine policies can now be supplemented with quarantine insurance.
Companies directly involved in mining and oil and gas in the region are witnessing voluntary employee evacuations. Many countries have begun to enforce curfews, and Liberia, while they are enforcing curfews as well, have quarantined an entire community with 50,000 people. Many local work sites and small business are closing their doors forever.
Businesses involved in health care, travel and tourism face immediate challenges and need to reexamine their policies and procedures related to emerging liabilities. But while West Africa represents only a sliver of the global economy, the World Bank estimated this week that the two-year toll could reach $32 billion.
From an insurance perspective, all policies should be reviewed with a global insurance expert to broaden or add coverage as may be required. Specifically, companies with any connection to Africa should evaluate their operations, even if it’s limited to employee travel. There is a wide variety of corporate travel insurance available.
If an employee diagnosed with Ebola requires evacuation or medical care, international health insurance may mitigate the costs and the associated logistics. But the policies must be airtight – flying an Ebola-stricken employee to a proper treatment center can well exceed $100,000 and insurance does not typically cover the cost of a precautionary evacuation. Depending upon the type of policy the insured purchases, there may be coverage for the medical evacuation when someone is actually diagnosed with the disease.
Coverage for an Ebola-related business interruption and revenue loss will not be covered, however, there are products in the marketplace that may provide some relief.
For every business, health and safety should remain top priorities. Beyond that, alternative production sites and supply chain partners should be developed among broader contingency planning. Other steps include:
- Consider all levels of exposure, including suppliers and raw-materials that might be affected.
- Develop contingency plans and review insurance policies related to changing exposures.
- Monitor the World Health Organization, the Centers for Disease Control and the U.S. Department of State for updates and travel warnings.
- Never violate international health recommendations. This can jeopardize insurance coverage.
- Meet with your insurance specialist to ensure all the proper policies and coverage is in place. A risk management specialist can also recommend steps to mitigate liabilities and avoid the need for additional insurance.