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Coronavirus or COVID-19 has not yet been declared a global pandemic but given the continued spread of the disease it seems likely it may only be a matter of time until the World Health Organisation takes that step. I thought it was worth taking the time to consider what impact Coronavirus could have on your Employee Benefits, especially if a significant outbreak were to occur in the UK and some of the worst fears which have been discussed by experts, such as two-thirds of the population catching the virus and 1-2% of those infected dying, were to happen.

Pensions and investments; The fear of the economic effects of the virus is already causing falls in worldwide stockmarkets and this could impact on your employees’ pension fund investments. The recent weeks have the potential to be the worst weeks in stock markets since the financial crisis in 2008. These falls, although significant, do follow some very strong growth in investment markets over recent years. If the spread of the virus were to continue and reach the worst forecasts there is no doubt the global economic impact could be significant. Members may wish to review their investment decisions and pension fund choices.

Your business’ sickness policies should be reviewed and clarified, when does your sick pay kick in? Would you continue pay or sick pay for those employees who decide, or you advise, to self-isolate due to contact with infected individuals or due to countries they have visited?

It is unlikely that insurance policies such as group income protection or group critical illness will offer any cover for such circumstances. For a Critical Illness claim to be valid, there would need to be an insured Critical Illness event. Coronavirus itself is not a ‘critical’ illness.

Coronavirus would have no specific impact on group income protection policies unless incapacity continued beyond the end of the policy’s deferred period. It’s effects are unlikely to mean an employee is off sick for the deferred period of an income protection plan which are often 13 or 26 weeks.

Travel insurance policies should be reviewed and checked. Will they cover repatriation or cancellation of booked trips? It is likely to depend upon several factors such as Foreign and Commonwealth Office travel advice, the policy conditions, when the travel policy was taken out and when the trip was booked. 

Group Life insurers have confirmed that deaths from Coronavirus will be covered. There are usually no exclusions under group life policies – all causes of death should be covered subject to eligibility requirements under the policy. However, some policies have a restriction on travelling against foreign office advice. As the foreign office has advised “against all travel (red zone) to a section of China,” Group Life policies may not cover individuals subsequently travelling there on business. They should, however, cover any individuals who travelled on business to an area which was not a red zone when they travelled, but has since become a red zone.

Group Life insurers are also likely to impose a ‘Catastrophe Limit’ or ‘Single Event Limit’ if this outbreak of the coronavirus became a pandemic and/or the catastrophe provisions under the policy are met. These ‘limits’ would vary from policy to policy there is not a standard limit, the size of the scheme and particular insurer will also determine the level of any limit applied. They are likely to be in the range of £5 million to £100 million of claims so it is unlikely the limits would be reached.

Private Medical Insurance providers are unlikely to provide significant assistance in the event of an outbreak. Although PMI members would be covered should they contract the illness, subject to their standard policy terms; it would be highly unlikely that they would be treated in any of the UK private hospitals as these are not set up for patient isolation. NHS Cash Benefit may be payable from certain private medical insurance policies for any NHS in-patient stay.

Businesses may also want to review their business protection policies to consider how they are protected in the event of death or productivity loss due to illness or implications of quarantines. In such circumstances, appropriate business protection cover such as Keyperson or Shareholder/Partnership cover can be invaluable for business continuity. The loss of a keyperson could result in the loss of that person’s skills and  their relationships/business contacts which could have a significant influence on the business. The proceeds of business protection policies could help mitigate the loss of a keyperson or partner.

For any further questions please contact Steph Gordon and the team at EBCam Employee Benefits | 01223 297063

Author: Steph Gordon from EBCam Ltd

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