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The return of swine flu – employee insurance

06 November 2009
The return of swine flu – employee insurance

Although many employers in the UK have business continuity plans to deal with a wide range of disruptions, they might not be adequately prepared for a pandemic, such as a potential mutation of the current strain of swine flu.

A human pandemic could escalate quickly, last for many months, and infect 25% or more of the world's population, according to public health experts. Analysts have predicted that at the peak of a pandemic, up to 50% of the workforce could be absent from work.

Companies have already lost money struggling to cope with high absentee levels caused by the initial outbreak, as well as the rising number of swine flu "skivers" and those being over-cautious.

So, given the prediction of a second, more widespread wave of swine flu developing in the next couple of months, organisations need to review their business continuity arrangements carefully to protect their employees and ensure they have considered the potential effects of staff absence.


Employers have an additional duty of care towards employees at increased risk owing to pregnancy or underlying medical conditions. They should carry out an individual risk assessment for such employees, and follow the Department of Health's advice.

The current guidance is that pregnant employees should carry on as normal, and therefore continue going to work, and using public transport if necessary. This advice could change if the number of cases of swine flu rises dramatically, in which case pregnant women and those with weakened immune systems could be advised to stay at home for a few weeks.

Timing is everything for businesses. Given the pressures employers are already facing because of the recession, having a robust continuity plan in place could make or break companies that are forced to deal with both issues simultaneously.

Confidence in business is currently very brittle. If stakeholders - be they employees, customers, business partners, shareholders or insurers - do not believe a business is well prepared and resilient, they might withdraw their support or take their activity elsewhere.

Consider these action points:

â- Does the plan address employee absence effectively and consider the implications of remote working and hygiene control?
â- Is the plan sufficiently well defined and robust to satisfy key stakeholders?


The outbreak of the H1N1 strain of swine flu in the UK and possible human mutation of the virus will undoubtedly have an impact on the insurance programmes of businesses, regardless of size or sector.

Here is an outline of the main types of insurance, the potential impact of an outbreak on coverage and recommendations to address the issue.


This provides cover against liability for injury, material damage or limited financial losses a third party incurs that result from the acts or neglect of the insured.

Insurers are not currently imposing any specific swine flu exclusions. Where a business is directly involved - for example, in the provision of hospitality to persons known to be travelling from infected areas - the ability to establish that such a liability exists becomes more likely, and the implementation of reasonable risk control measures to protect employees or others will be critical to the defence of any such liability claim.


Should it become necessary, this type of policy would respond to employee claims for swine flu in the same way as any other infectious disease, provided legal liability is established, for bodily injury, death, disease or illness sustained by an employee within the territorial limits of the policy and caused during the period of insurance. No exclusions are permitted by law for the first £5m of each occurrence.


The risk of interruption to a business is obvious if circumstances prevent employees getting to work, either through Government advice not to travel into particular affected areas or to stay at home because of disruption to travel services.

There could also be a more direct effect brought about by an incident occurring at or near the vicinity of the insured's premises, causing either absences through fear (of employees) or loss of attraction (of customers) or even the physical intervention of a competent local or civil authority ordering closure of a premises.

There may also be costs incurred in "cleaning" an area of the premises affected by some organism that may give rise to the disease.

So how might a property damage and business interruption policy respond?

  • A standard business interruption policy requires the interruption to be caused by physical damage to property at the insured's premises.
  • In respect of a discovery of swine flu on the premises, insurers would argue that the presence of the organism does not constitute physical damage.

The obvious step, therefore, would be to obtain an extension of cover for infectious diseases. This is a common policy extension that grants cover, typically for a three-month period, and for limits in the range of £250,000 to £5m.

However, insurance under this extension is likely to be compromised by commonly imposed insurer restrictions limiting cover to an incident on the insured's premises only and/or to it being an event that must be notifiable by order to a competent authority.

Swine flu is not presently designated notifiable, and should this change it is likely insurers would amend their wordings immediately to exclude the disease from coverage.


  • What are the core functions that are critical to continuing your business?
  • What supplies and materials are necessary to maintain your service?
  • Who are the essential personnel necessary to continue your business?

For each of these questions, think about:

  • How might the core functions be affected?
  • What should be done to protect them?
  • What alternative options or solutions are available?


Marc Brennan Gauntlet Insurance
Tel: 020 7725 4313

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