UK travellers heading to Latin America and organizers of concerts, conferences, or other similar events in the region are unlikely to get insurance to cover cancellations due to the Zika virus.
Brokers are advised to inform consumer and commercial clients that those seeking cover are likely to find clauses that Zika-related cancellation is exempted from their insurance policy.
The International Olympic Committee (IOC) has taken out cancellation policies several years in advance, even before the mosquito-transmitted disease has made headlines and travelled throughout the Americas. Existing policies are unaffected by the Zika scare, according to Gary Flynn, at insurance broker JLT
Insurers said that they are unaware of any event cancellation due to Zika, but their underwriters are not taking any chances about the possible impact of the disease outbreak on sponsors or hospitality providers, as well as on other events in the region.
The Zika virus has been linked to microcephaly in babies born to an infected mother, in which the baby has an unusually small head and may have developmental problems. The World Health Organization has advised pregnant women to refrain from travelling to areas under Zika outbreaks, as there is a risk of birth defects to the child.
Some organizations and countries have also issued warnings. The United States has told sports federations that athletes and staff may not attend the 2016 Olympics in Brazil if they are worried for their health.
The IOC says it has purchased cancellation insurance worth about US$800m for the Olympics. The premium is estimated to be around US$13m. Insurance for events of this scale is usually bought at least five years beforehand, but other peripheral events not organized by the IOC may not be insured yet.
Since the foot-and-mouth disease outbreak among farm animals in the UK in 2001, insurers are now more aware about the risk of communicable diseases, which are transmitted from person to person or from animal to person. Contingency policies usually have a blanket exclusion for communicable diseases. However, insurers are divided whether Zika and other mosquito-borne diseases should be considered communicable, hence the need for a separate Zika exclusion clause.
Cover may still be available for Zika-related cancellations, but the premium cost is likely to be very high, making it quite prohibitive, especially for small- to medium-sized events.