Zika Risk May Lead to Limited Insurance Coverage at Sporting Events
By: Denise Johnson
June 6, 2016
Continued Zika virus warnings may dampen summer sporting events, such as the Summer Olympics which is set to be hosted by Rio de Janeiro in August, as insurers weigh the risk of insuring such events in the midst of another potential global communicable disease outbreak.
The Zika virus is transmitted to people via infected mosquitoes. A press release issued in March by the governor of New Orleans stated that one in five people infected could develop symptoms within three to seven days. The symptoms, which may last up to a week, include fever, rash, joint pain, muscle pain, headache and conjunctivitis. According to global health agencies, the virus can spread through sexual contact and also to unborn babies. More serious effects of the virus include microcephaly in infants and Guillain-Barre syndrome, a severe and progressive neurological disorder.
Currently, there is no vaccine to prevent the virus and no medicine to treat it. The Centers for Disease Control and Prevention recommends rest, fluids and certain over the counter pain medication.
At least 50 people in the United States have been infected by the virus according to the CDC. The CDC declared that its emergency operations center has been placed on a “Level 1” status – its highest level of activation – as a result of the Zika outbreak. That level of activation has only occurred three times in the past: during the Ebola outbreak in 2014; during the H1N1 pandemic in 2009; and after Hurricane Katrina in 2005.
Recently, Rio’s mayor assured the Olympic Executive Board that the outbreak was under control in the city. Weather conditions are expected to improve the situation, since the onset of the dry season begins in summer there.
But despite preventive measures being taken in Rio and elsewhere, the Zika virus is expected to complicate procuring certain types of insurance, like event coverage.
Dan Burns, president of PFS, a managing general underwriter for companies like Lloyd’s of London and Chubb, explained that there are two types of insurance coverage for events: business interruption and event cancellation.
The Chicago-based company specializes in coverage for professional sport franchises, stadiums, as well professional and amateur athletes.
Both policies offer broad coverage for communicable diseases.
“What clients typically do is they purchase this coverage not knowing what the next outbreak of something is going to be, but they are therefore protected against it,” Burns said.
If the government or a third party deems an event too risky and either cancels it or stages it elsewhere, the policy would come into play.
According to Burns, revenue streams that could be impacted as a result of moving a game or cancelling an event include:
- Ticket sales
- Concessions sales
- Parking fees
- Merchandise sales
- Revenue from signage sponsorships
Both Burns and Royal Oakes, a Los Angeles-based partner with Hinshaw & Culbertson, say Zika specific coverage would be very expensive.
See full article on Claim Journal website here.