Ebola and Its Impact on Insurance


Ebola has been dominating the news in last few days. So it was only a matter of time before someone asked the question: What impact will this have on life and health insurance if the outbreak becomes an epidemic in the U.S.?

Much of this discussion was sparked by a report that the cost of treating Thomas Eric Duncan, the Liberian man who was hospitalized in Dallas for Ebola and who died there earlier this month, was around $1,000 an hour, or close to $500,000 overall. Duncan had no health insurance.

Earlier this week, the Insurance Information Institute (III) published a comprehensive fact sheet on its website, listing the potential ramifications the spread of Ebola might have for the insurance industry.

The III report notes that few residents in Liberia, Guinea and Sierra Leone – the nations at the heart of the Ebola epidemic — have any sort of life or health insurance, so any current economic impact to the global insurance industry has been minimal so far.

But even if Ebola would become widespread in the U.S., affecting tens of thousands of people, insurers in this country should be able to weather the crisis, according to the III.

The III notes that around one-third of adults in the U.S. have life insurance through their employers, with the typical coverage equaling one year’s income. Another third of U.S. adults have individual life insurance, with the death claims on those policies averaging around $200,000.

“In a typical year life insurers pay about two million death claims,” the III report said, “so another 100,000 would be only 5 percent more than typical.”

But health insurers present a different situation, according to the III. The high cost of hospitalization and treating Ebola patients could hit health insurers hard, depending on the extent of a possible outbreak.

“Many people would need to be tested to see whether they have contracted the virus, and the cost of isolation of those affected could be substantial,” the III report says. And in the case of individuals with no health insurance, “treatment costs will likely be borne outside the private health insurance system.” This is of special concern, because many of those Ebola patients could be from outside the U.S., and not covered by health insurance.

Other insurance-related considerations, including workers compensation, general liability and medical malpractice, are additional issues that the insurance industry would have to face in the event of a major outbreak.

Insurers are offering coverage for hospitals, theaters, restaurants, hotels and other public spaces that may have to close if they have a customer with Ebola.

Miller Insurance Services, an independent specialist insurance broker, and William Gallagher Associates, a U.S. retail insurance broker, announced Pandemic Disease Business Interruption Insurance, provided by the Ark Syndicate at Lloyd’s. The insurance is designed to cover loss of income arising directly out of shutdowns of health care facilities as well as diminished revenues in the aftermath of a quarantine.

NAS Insurance Services, a California provider of specialty insurance coverages, said it will offer coverage against business losses suffered because of a government-ordered closure stemming from the Ebola virus, the Denver Post reported.





Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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