A broad spectrum of responses have emerged from the market, we provide clarity on the increasing gradients of limitation.
There is no consensus in the market, instead a broad spectrum of responses has emerged, detailed in the next few slides are the increasing gradients of limitation:
It is worth noting, there are several HPL/GL markets that have not adjusted their language or stance as a result of Covid-19. However, in these cases the market’s knowledge exclusion and stance on its application in a pandemic situation must be discussed. Additionally, mold and/or pollution exclusions must be reviewed carefully to ensure that coverage for treatment of patients is not inadvertently excluded by these clauses.
These limitations are highly variable and can exclude narrow elements of concern e.g. transmission, employers’ liability or a wide variety of concerns e.g. transmission, rationing, vicarious liability, gross misconduct, unlicensed providers etc.
Most limiting language is characterised by the maintenance of coverage for the treatment of patients with Covid-19.
We have seen one iteration that creates boundaries on coverage by applying a retroactive date limitation specific to Covid-19.
Covid-19 exclusions are often broad and commonly apply to all coverage parts. They often utilize language like “including, but not limited to”, a broad phrase that has potentially wide and unintended applications. These exclusions often also carve out coverage for treatment of patients with Covid-19.
Pandemic exclusions often apply to all coverage parts within the policy and exclude coverage for communicable diseases (both Covid-19 and future events) that have been declared at least as one of three things:
Public health emergency (PHE) of national or international concern
Epidemic
Pandemic
It is critical to understand the definitions of these three terms as insurers use different definitions. However, there does seem to be a broad market attempt to utilize internationally recognized terminology and definitions (e.g. World Health Organization (WHO) terminology).
Please note that not all markets use all three terms: some use only pandemic, some epidemic and pandemic and some insurers reference all three.
Where public health emergencies are referenced within policy language it is critical to ensure that the scope is limited to communicable disease, as there are non-communicable disease public health emergencies (e.g. the opioid crisis and road traffic accidents).
Pandemic exclusions often (but not always) stipulate two triggers of the exclusion:
The declaration is from an official body (WHO or governments or both).
The date of declaration of the event (PHE, epidemic or pandemic) is the date the coverage exclusion is triggered. Many insurers do not reference an end period to this exclusion, others explicitly state that there is no end to the exclusion once triggered.
Additionally, several versions of pandemic exclusions also contain nested Covid-19 exclusions, such that Covid-19 will be excluded going forward whether or not Covid-19 is in pandemic/epidemic status.
In general, communicable disease exclusions are exceptionally broad (many are absolute exclusions) and preclude coverage for a wide variety of diseases, as a result they pose a problem for most direct care settings.
Communicable disease exclusions are most widely being used in the senior care setting where direct care concerns are less likely. Beyond the senior care segment, a few markets are applying communicable disease exclusions to GL coverage parts. In such instances it will be important to ensure that patient GL is picked up within the HPL coverage section.
The central tenet of the emerging Covid-related batch limitations is the markets’ view that the presence of a communicable disease by itself is not enough to apply batching mechanisms and group claims. Such batching limitations do not, however, specify what ‘other’ element must be present for Covid-19 (and other communicable disease) to be batched. Additionally, a few insurers are proposing per patient retentions that effectively strip out the ability to batch Covid-related claims.