Risk protection from pandemics becomes vital financial planning tool

People remain highly vulnerable to the impacts of COVID-19 and other pandemics, and the implications for individuals, families and employers are onerous

Countries across the globe are facing a second wave of COVID-19 infections, driving home the realisation that this virus – and many more – will be with us for years to come. COVID-19 has unequivocally demonstrated our globally interlinked vulnerability to virus outbreaks, with several viruses jumping from animals to humans.  Many of these viruses are deadly, and while the novel coronavirus currently driving outbreaks around the world may have lower fatality rates, it still poses a frightening threat to public health as we don’t yet have the means to combat them. Without a vaccine, people remain highly vulnerable to the devasting physical and financial impacts of this pandemic, and the implications for individuals, families and employers are onerous.

“As South Africa moves back to stricter lockdown regulations, the realisation sets in that the risks of infection have not eased and are in fact amplifying. Countries like the UK, France, Poland, the Netherlands, Spain and South Africa are seeing a resurgence of infections. In the absence of a vaccine, herd immunity or significant behavioural change which is virtually impossible in South Africa’s vastly unequal society and living conditions, South Africa may very well have to learn to live with COVID-19 on a long term basis, in much the same way as we have with TB and HIV,” explains Martin Rimmer, CEO of Sirago Underwriting Managers (FSP 4710), an authorised FSP.

Many scientists are also warning that Covid-19 is just the tip of the iceberg – currently there are nine priority diseases flagged by the World Health Organisation (WHO) as having the potential to become pandemics – and many have more severe mortality and morbidity rates than COVID-19¹. According to the World Health Organisation (WHO), the following diseases pose the greatest public health risk due to their epidemic potential and the fact that there are insufficient countermeasures. At present, the priority diseases are:

• COVID-19
• Crimean-Congo haemorrhagic fever
• Ebola virus disease and Marburg virus disease
• Lassa fever
• Middle East respiratory syndrome coronavirus (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS)
• Nipah and henipaviral diseases
• Rift Valley fever
• Zika
• Disease X* – represents the knowledge that a serious international epidemic could be caused by a pathogen currently unknown to cause human disease.

The reality is that scientists have expected something like COVID-19 for some time since our global connectivity has meant that the next epidemic is often only a flight away. Like COVID-19, the WHO priority infectious diseases pose a serious pandemic and health risk since there is no vaccine or medicine that is effective against them.  ‘Disease X’ is listed as a future disease that humans have never seen before – many diseases identified by WHO normally exist in animals, so the likelihood of outbreaks increases when animals and people come into contact through habitat encroachment, animal husbandry and trade.  In an article published on BizCommunity (27 July 2020), Professor Robert Bragg, Researcher in the Department of Microbial, Biochemical and Food Biotechnology, cites that the bird-flu virus – Influenza H5N1 – has a mortality rate of around 60-65%, but it has not yet developed human-to-human transmission. If it does, we could be in for a horrific pandemic.²

“These factors along with global travel and trade, climate change and urbanisation mean that the risks for more pandemics is very real, and that COVID-19 won’t be the last in our modern age.  The bottom line is that economic, social and financial models will need to be reinvented to take stock of pandemic risks, and likewise insurance and risk models will need to follow suit,” says Rimmer.

When the COVID-19 pandemic broke, so did the sobering realisation that there was simply no insurance or risk solution on the market that protected consumers from the financial impact of a pandemic disease.

In response to this, the ‘Pandemic Shield’ insurance solution was conceptualised and launched in July 2020 as an affordable solution that pays out a lump sum stated benefit if the policy holder is hospitalised as a result of being positively diagnosed with COVID-19 currently – or any other World Health Organisation declared pandemic illness in the future which requires ongoing treatment for the declared pandemic.  The benefit trigger is an admission to hospital for 48 hours or longer. Cover is available for individuals, families, people over age 60 as well as for employer groups, and includes cover for rare diseases if hospitalised. The Pandemic Shield insurance policy is underwritten by GENRIC Insurance Company Limited (FSP43638) an authorised Financial Services Provider and licensed non-life insurer.

Employers to take stock of pandemics and impact on their employees and financial health

“There is a definite pressing need for employers of ‘high risk’ employees to take proactive action to help protect their staff from the implications of hospitalisation due to COVID-19, or any other pandemic.  These include the likes of retail staff, call centre agents, healthcare workers, and anyone who works in an industry considered an essential service and who is thus at greater risk of being infected.  Many of these employees are blue collar workers, commission earners or paid hourly for work done – all people who physically need to be present and productive to generate an income and pay the bills.  If hospitalised for Covid-19, their ability to earn is immediately hindered.

“The risks however don’t stop there and the financial implications are much wider and interconnected – think of the additional childcare costs, groceries, medication costs, transport, paying the bills or facing a prolonged recovery period after hospitalisation – all of which can severely stress personal and family finances.  In the last few months, we are aware of a number of employer groups who faced having 50 or more employees infected at any one time by COVID-19 and were also affected by high mortality rates.

This has massive implications not only for the affected individuals, but also for employers in trying to manage the fallout and assist employees and families who face financial devastation.  Very few, if any of these employees can manage the financial ramifications of being off work for a few weeks, or worse.  The negative impact on productivity and employee morale is massive, especially if there is no safety net in place to assist them,” explains Rimmer.

Pandemic Shield is not an income protection benefit, but rather pays a fixed lump sum that can be used to help mitigate some of the financial obligations one may face while hospitalised. For a commission earner like a call centre sales agent – this can mean the difference between financial ruin or being able to pay the bills and other family obligations.

“The very nature of a black swan event – like COVID-19 or any other pandemic – is its unpredictability, its massive, inter-connected scale and the long-term devastation that accompanies it. Typically, these events can only be rationalised with hindsight. In learning from the fallout of the past 11 months, COVID-19 has changed everything and highlights a serious and urgent need for a new approach of how we manage personal as well as business financial and continuity planning.

For employers of vulnerable employees and essential services staff, it means having to relook the make-up of employee benefits packages to protect employees and the bottom line against the impact of a disease they could very well contract in their work environment. Covid-19 has radically changed the type and level of risk protection demanded in a world where pandemic illnesses look set to be part of the future in an interconnected and interdependent world,” concludes Rimmer.

More information can be found at: www.pandemicshield.co.za