Businesses Feel Impact of Coronavirus
Global business is beginning to feel the impact of the coronavirus as large parts of China remain locked down and other Asian countries are on high alert. The Wall Street Journal reports that disruptions to travel, retail, hotels, and factories are on the rise, with multinational firms closing their locations in mainland China.
Insurance, according to experts, will be of little help because, after the 2002-03 severe acute respiratory syndrome (SARS) outbreak, many insurers excluded epidemics from their standard business interruption policies. SARS cost insurers and reinsurers $41.8 million in Hong Kong for business interruption claims. “The potential losses from communicable diseases can be terribly large. If all economic losses were insured, it would become commercially unviable for insurers themselves,” said Simon McConnell, Hong Kong-based managing partner at Clyde & Co.
Insurers do offer costlier extended policies that cover public-health risks, often bought by leisure and travel companies, but those policies often have strict conditions. Businesses, including event organizers and sponsors, are likely to shoulder more of the losses related to coronavirus.