Epidemic Risk Insurance

Epidemic risk insurance is by nature a highly tailored solution meeting the demands of each individual insured. These solutions are crafted by taking into consideration multiple aspects of each insured’s business including complexity, industry type and geographic spread.

Why is Epidemic Risk Insurance Needed?

Insurers are addressing a significant coverage gap that traditional insurance has not been able to solve: non-damage business interruption for loss of gross profit as a result of an epidemic. Most standard property damage policies require a business interruption to be from physical damage and also typically exclude communicable diseases. This coverage may be extended to include communicable diseases by endorsement, but only limited capacity is available and with restrictive terms.

In order to close this gap, Insurers have developed expertise in epidemiology, statistics, risk modelling, finance and claims management as well as a range of innovative tailor-made risk transfer solutions for many different industry types exposed to epidemic risks. This policy can also provide optional access to specialized epidemic risk management experts to assist in current and future outbreak mitigation and preparation.

Epidemic Risk Insurance

What Does Epidemic Risk Insurance Cover?

The policy is designed to cover epidemic outbreaks of known disease types such as Ebola and coronaviruses, as well as unknown newly emerging viral diseases. Coverage is available on a prospective basis. It is not possible to purchase coverage for disease outbreaks which have already occurred e.g. COVID-19.

Optional add-on coverage for variants of influenza (for example “Swine Flu” or “Avian Flu”) may also be available. Certain disease exclusions are HIV, bacterial infections (e.g. TB and Meningitis) and endemic diseases (those prevalent within a population e.g. Malaria in Africa).

Is the Policy Parametric or Indemnity Based?

Typically solutions are indemnity based but parametric solutions are also available.

Epidemic Risk Insurance

How are Policy Limits Structured?

The policy limit structure can be tailored to your needs, depending on the level of balance sheet protection required. However, typically a two layer structure is employed, plus a dedicated sub-limit for Crisis Management Costs:

Crisis Management Costs: $500,000

To allow for immediate risk minimizing efforts such as extra expenses for hygiene purposes or for media costs to restore consumer confidence.

Layer 1 (5-10% of total limit)

This layer is designed to cover the insured for the early stages of an outbreak.

Layer 2

This layer is designed to cover the insured for larger outbreaks and is also deigned to unlock capacity on a sliding scale, starting with a nominal number of deaths.

How is the Epidemic Risk Insurance Triggered?

The World Health Organization (WHO) and the number of deaths in a certain country form the fundamental trigger methodology for this type of insurance. Based on a two layer limit structure for a tourism dependent business, a possible trigger structure may look like this:

Layer 1 Trigger: WHO Declaration

Issuance of a WHO Disease Outbreak News (DON) bulletin referring to an indigenous case within the area of a covered insured premises. No deaths required to trigger this layer.

It is likely at this stage of the outbreak that only a small loss may materialize. If the outbreak becomes larger, Layer 2 will provide additional capacity.

Layer 2 Trigger: Death Count

The initial death count threshold depends on geography, but may start as low as 25 deaths in country. A sliding scale is then applied so that each additional death unlocks additional capacity until the top threshold is reached (e.g. 250) where the entire limit of the program is available.


Are multi-year policies available?

Can multi-geographical clients be insured?

Yes. A “regional cluster” approach is utilised that simulates a
facility arrangement with a shared aggregate limit, thereby allowing
for the diversification effects to reduce premium.

What are the target sectors?
The solution can be tailored to a wide range of industries.
Underwriter focus to date has been on the following sectors:
Hospitality & Gaming, Restaurants, Travel & Tourism, Aviation,
Education, Healthcare, Mining, Retail, Sports/Events.

What is an Epidemic Period?
Typically set between 6-9 months. This period commences with
the issuance of a DON by the WHO and represents the length of
a covered epidemic/pandemic. It also serves as the period in which
the insured selects the indemnity period.

What is an Indemnity Period?
Typically set between 3-6 months. This is the period that business
interruption calculations are based upon. It is within the epidemic
period, but unlike property damage business interruption, this policy
has the benefit of allowing the insured to select the most impacted
consecutive period for business interruption calculations.

Who counts the fatalities and cases?
Are they reliable?

The counting of cases and fatalities is done by the WHO, an
independent third party with no affiliation to Insurers. The
numbers are reliable as they are the official numbers used and
published by the world’s leading public authority in the field of
(Public) Health. WHO is also the authority that issues the official
Notifications referred to in the policy wording (WHO DON).

GDI Insurance Agency, Inc.

California’s Leader in Insurance and Risk Management

As one of the fastest growing agencies in California, GDI Insurance Agency, Inc. is able to provide its clients with the latest and greatest of what the insurance industry has to offer and much, much more.

We are headquartered in Turlock, CA, with locations across the heart of California’s Central Valley, Northern California and beyond to provide a local feel to the solutions and services we provide our clients. We pride ourselves on exceeding our client’s expectations in every interaction to make sure that our client’s know how much we value and appreciate their business. Contact us today 1-209-634-2929 for your comprehensive business insurance quote!