The Insurance Council of Australia (ICA) has officially declared the coronavirus (COVID-19) outbreak to be an ‘insurance catastrophe,’ following its designation as a pandemic by the World Health Organisation.
The ICA noted that the extent of claims and losses related to the COVID-19 spread remain unknown at this point, but said that it had formed a task force to capture claims data as it emerges.
The Council also provided some insight into what risks might be covered by different insurance policies, and where companies could face exposure.
For example, it observed that some business interruption policies respond to the closure of a business by an authority for a number of risks, including infectious disease.
That said, since 2005/2006 the global insurance industry has begun to introduce general exclusions for losses related to quarantinable diseases, with the majority of policies in Australia likely to contain such an exclusion.
The ICA further noted that most travel insurance policies have exclusions for outbreaks of infectious diseases, pandemics and epidemics, with many also including restrictions that can be triggered when governments enact travel warnings for certain locations.
Policies purchased prior to COVID-19 becoming a known event may cover travellers who are overseas for coronavirus-related expenses, it added, but those purchased after are unlikely to cover travellers who are overseas or who are yet to travel for coronavirus-related expenses.
In terms of life insurance, the ICA believes that there are no exclusions in existing life insurance policies that would prevent the policy paying out for a claim related to coronavirus if government travel advice is followed.