Covid-19 UK: What happens next? Summary note

Claims for business interruption losses under business interruption insurance policies have focused on two types of non-damage extension: denial of access extensions and notifiable disease extensions. 

The Insurance Position: Ben Keatinge

Insurance cover for Covid-19 business Interruption Losses

Claims for business interruption losses under business interruption insurance policies have focused on two types of non-damage extension: denial of access extensions and notifiable disease extensions. 

The FCA Test Case

• There remains significant uncertainty regarding the extent of cover provided for business interruption losses.
• FCA test case seeks to resolve this uncertainty. The test case was heard by the High Court in July 2020.
• With some wording-specific exceptions, the court generally found that denial of access extensions will not respond to business interruption caused by measures imposed nationally. Conversely, the court held that the notifiable disease extensions will, generally speaking, respond to losses caused by the national restrictions.
• A number of key elements of the High Court judgment were appealed to the Supreme Court in November 2020 and the decision is awaited.

Whatever the outcome, ongoing developments in the Covid-19 situation will be highly relevant to the extent of cover under business interruption policies.

A Virologist's Perspective: Professor Julian Hiscox

Different types of Coronavirus

Different types of human coronaviruses have been studied for some time. Whilst many of these viruses tend to cause a common cold in most people, the elderly or immunocompromised can develop severe lung infections. The most serious coronaviruses include MERS-CoV, (35% fatality rate), SARS-CoV ("SARS"), (15% fatality rate) and Covid-19 (0.5- % fatality rate). 

Covid-19

Most people who contract Covid-19 are asymptomatic. However, asymptomatic people often possess similar viral loads to presymptomatic people. This means that the virus is transmitted by persons infected during asymptomatic and pre-symptomatic phases, making Covid-19 difficult to contain. Many people suffering from Covid-19 are described as having "pneumonia" or "atypical pneumonia". These are "catch-all" terms that describe inflammation of the lungs due to bacteria or other causes.

Tests for Covid-19

1. Nucleic acid-based tests: these tests include the RT-PCR (the most common test used for test and trace) and the Loop-mediated isothermal Amplification Passes (LAMP tests), which have been used in Liverpool. LAMP tests are very quick tests, but often result in false positives.
2. Antibody tests: these tests indicate whether you have been infected and may form part on an immunity certificate.
3. Antigen tests: these tests also confirm infection, but look for viral proteins and take 15-30 minutes. However, these tests are not as reliable for detecting asymptomatic cases.

Immunity and Track and Trace

Previous studies of seasonal coronaviruses indicate that Covid-19 will likely become seasonal. This will mean that re-infection could occur within months, and that updated vaccines may need to be taken yearly to allow for new strains. Countries that have had some success at containing seasonal coronaviruses, including Saudi Arabia have relied on extensive track and trace systems and specialised hospitals (equivalent to the UK's Nightingale hospital), which allow immediate isolation of infected patients and rapidly stops community transmission.

Q&A with Ben Keatinge and Professor Julian Hiscox

Do you have a view on the merits of the mass testing programme in Liverpool?​

Prof. Hiscox: Mass testing programmes are great if you are yet to roll-out a good vaccine. Without a vaccine you have two options:

1. Herd immunity, which can overwhelm hospitals; or
2. Test and trace, which will only work if the public complies with self-isolation requirements.

What are the chances of a similar disease emerging in the future? 

Prof. Hiscox: In the past 10 years, we have seen three major viruses, namely the 2009 influenza virus that spread out of Mexico, the Ebola virus, which was constrained to West Africa but brought economic devastation to that region, and the Zika virus, which caused particular problems in Brazil, including birth defects. We have also seen MERS-CoV and now Covid-19. 

How might insurers amend insurance wordings to accommodate similar pandemics going forward?

Ben Keatinge: Aside from ceasing to offer the extensions discussed, insurers could opt to:

1.  Exclude all pandemics from newly issued policies; or
2. Offer cover for a closed list of diseases, only adding new diseases to that list when their effects are understood.

Do you think that the vaccines for Covid-19 will be as effective as the flu jab?

Prof. Hiscox: It looks like the vaccines will give a stronger immune response than having the infection itself. You could probably issue an immune certificate for 90 days at the moment. I would predict that the vaccines currently being developed will probably provide immunity for a year, as we know that antibody responses to MERS-CoV and SARS last for two to three years before they wane. Unless we get this virus completely under control then there will be strain variations, which we have seen with other coronaviruses.

Would there be any merit in a single person getting more than one 4 of these vaccines?

Prof. Hiscox: Not at the moment because all of the vaccines are based on the same sequence of viral protein. However, the Moderna and Pfizer/BioNTech vaccines are more flexible than the Oxford vaccine.

Do we have any idea why some people suffer with "long Covid?"

Prof. Hiscox: Not at the moment. With Ebola we took blood samples from patients who were acutely ill and we worked out ways of predicting whether they would survive or not. We are now trying to do the same research with Covid-19. It looks like there is a genetic component that might explain why a small proportion of people become really unwell.

Do you have a broad area in mind of the percentage of vaccine uptake that we would need in the population in order to effectively eradicate the virus?

Prof. Hiscox: I think vaccination for Covid-19 should be compulsory. We need 60-80 per cent of the population to be vaccinated. 

Should we be concerned about the reports in the press of Avian flu and coronavirus in Danish Mink?

Prof. Hiscox: We are definitely concerned about bird flu as it has the potential to jump into humans although this is a rare event. This is why if you get Avian flu in a poultry farm, most of those chickens are destroyed to prevent the spread into humans. What we know with the "mink" coronavirus is that it spread from humans into minks and then it changed. This meant that people who were immune to Covid-19 could be re-infected.

Do you have any concerns regarding the speed that those vaccines have been developed?

Prof. Hiscox: I appreciate people's concerns. The Oxford vaccine has actually been in development since 9/11 and was previously tested in humans in Saudi Arabia, the United Kingdom and the USA as part of phase 1 clinical trials for MERS-CoV. Whilst vaccines are not without risk, you have to balance that risk with the risk of severe infection from the disease itself. We have been running vaccines successfully for decades now.