Insuring the business of HC against Pandemic Influenza

 

Although it's true you can insure just about anything against just about anything, today's news item came as a bit of a surprise:

 

From Marketwatch.com

Lexington Insurance Company Introduces Pandemic Rx

Endorsement to Lexington's Commercial Property Insurance Covers Financial Risks Faced by Healthcare Providers in the Event of a Pandemic Flu

NEW YORK, Jul 31, 2008 (BUSINESS WIRE) -- Lexington Insurance Company, a unit of AIG Commercial Insurance, today announced Pandemic Rx, an endorsement to Lexington's commercial property policy for acute care medical facilities to cover business income loss and extra expenses incurred during a declared pandemic influenza public health emergency (as defined in the policy).

"Because of the complex nature of healthcare economics, a pandemic flu would put tremendous financial strain on healthcare providers. An increase in hospital admissions, expected during a pandemic flu event, could actually result in reduced revenues and business income loss," said Kevin Kelley, Chairman and CEO, Lexington Insurance Company. "In an environment of resource scarcity, elective procedures may be canceled which may then lead to a lower average reimbursement rate for care provided during the pandemic event."

Continues….

 

Back in December of 07 I did a post, Pandemic Accounting, and it addresses why this insurance was brought to market. It is still relevant to the issue and if you haven't read it I [modestly] suggest you do so.

 

I close out that previous post with these words:

 

Even though this article addresses the financial burdens a pandemic will place upon most hospitals the supporting underpinnings are some of the best I have seen outside of dense scientific papers. Admitting it's crass and insensitive to lean on financial concerns to support PanFlu concerns in general when I refer to what will be human lives and miseries, it's as the saying goes—money talks.

The question is—is anyone listening?

 

The insurance industry is listening.

 

SZ

Comments

[gsgs]

interesting.

Now the question is, how much do they require for such a policy ?
From the article I assume that they are
trying to keep this secret.

[SophiaZoe]

Ah, gs, there is not reason to assume that it is a "secret" being kept with deliberateness. Rates are based on multiple factors: Level of coverage, # of exclusions, etc., to say nothing of whether they factor in the socio-economic factors of the community the center serves. Cost was/is not especially relevant to the article, nor my comments on it, iow, cost is minutia unless the dollars are coming out of *your* budget.

PS: Don't forget that I will be posting exclusively at my *new* blog after the month of August: pandemicchronicle.com [no www. prefix]

[gsgs]

the point is, of course, that they must have spent
some effort to estimate the magnitude of the threat, and that they put their money on that
estimate. As you know - other than you(?) -
I think it's important to have such estimates.
The British government and risk advisary group
seem to agree.
Else, it could just have been blown up as Y2K or such and amplified by flublogia,experts seeking
for H5N1-grants etc. - who knows. Or are you
afraid to see these estimates, because they
are supposedly so low ?? (as in mortality bonds
rating, rating agencies on insurance companies ,acturies-articles,...)