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Managing the threat of MERS

Source: Asia Insurance Review | Aug 2015

Firms need to review their pandemic plans and protect   themselves from potential liabilities in the wake of the Middle East Respiratory Disease (MERS) outbreak, which poses new challenges compared to the 2002-03 SARS crisis, said experts at a seminar hosted by JLT and the Pan-Asia Risk & Insurance Management Association (PARIMA).
   With limited insurance options for pandemics, firms need to review their existing policies and processes to respond accordingly, even as the market is currently working on new related products, they said.
Seek guidance from WHO and governments for BCM plan
Compared to SARS, MERS has a higher fatality rate of about 35% so far. Mr Craig Peterson, Regional Director, Risk Consulting, JLT Specialty Asia, said that there is no control over a pandemic and its effects, thus the focus is not how to stop it, but how to react to it. Companies should seek guidance from the World Health Organisation (WHO) guidelines and their governments for the local perspective, before establishing a risk assessment matrix to guide their actions along a business continuity management (BCM) approach.
   The BCM process should first include an emergency response to deal with immediate threats to life and property, followed by crisis management to front the media and shareholder concerns, then business recovery.
   Mr Peterson emphasised that while governments in a country like Singapore were proactive in providing guidance, firms with international operations might need to step in and manage the situation themselves, in markets where jurisdictions are less responsive. 
Check if policies cover pandemic outbreaks
Due to landmark claims in Hong Kong’s hotel industry during SARS, Mr Philip Ondaatje, Managing Director, Strategic Risk Solutions, JLT Specialty Asia, cautioned that the insurance industry had since realised the extent of exposures they had not modelled for, and so had tightened many of their policies to exclude pandemic outbreaks completely today. It is thus critical for firms to understand their coverage for such diseases.
   Mr Ronak Shah, Regional Director, Financial Lines Group, Asia, JLT Specialty Asia, flagged that there were also liabilities for Directors & Officers (D&O), leading to indirect exposures which firms may be unaware of. He suggested that firms without D&O insurance should take out such policies, while those insured for D&O should examine whether their policies were adequate.
Expect the unexpected
Mr Steve Tunstall, PARIMA Secretary-General and Director of Tunstall Associates noted that while “history informs the present”, the big change since SARS was the rise of social media – firms need to think about how the latter would affect their approach.
   “Expect the unexpected. Things which we haven’t really thought of or planned for will come up,” he added, which summed up the challenge of MERS.


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