Coronavirus insurance concerns: joint statement

NDNA and insurance partner Pound Gates have put together a joint statement to clarify the situation regarding insurance in the event of a closure as a result of COVID-19.

Today (Wednesday 4 March) the Department for Health and Social Care said it will register COVID-19 as a notifiable disease. Pound Gates logo

However, this does not change the situation for many nursery businesses because insurance companies will only pay out on listed specified diseases.

NDNA’s Head of Policy Jonathan Broadbery said: “Following this announcement from the Government nurseries should check the wording of their policies because it will not affect the situation unless all ‘notifiable diseases’ are covered.

“The Government still needs to factor in the potential cost of nursery closures as a result of public health advice, staff shortages due to illness and deep cleaning bills into their contingency planning. We will continue to push for these to be recognised.” 
A Department of Health and Social Care spokesperson said: “We want to ensure any steps taken to protect the public during the COVID-19 outbreak are proportionate and do not come at an unnecessary social or economic cost.
 
“To mitigate the impact on businesses, we will register COVID19 as a notifiable disease. This will help companies seek compensation through their insurance policies in the event of any cancellations they may have to make as a result of the spread of the virus.”

NDNA and Pound Gates put this joint statement together to clarify the situation for nurseries:

“NDNA and Pound Gates are aware of a lot of concern about the implications for nurseries of the new Coronavirus, COVID-19.

“As a new communicable disease it is very likely that this will not feature in standard business insurance cover. 

“As a responsible insurance intermediary Pound Gates took steps last week, in response to a growing number of enquiries from its clients (many of whom are NDNA members), to advise that its nursery insurance policy, underwritten by Ecclesiastical Insurance, does not provide insurance cover for any increased costs or lost revenue due to interruption to your business caused by the coronavirus (COVID-19). This is because the cover provided under the policy - in common with that provided by most UK insurers -  is only in respect of certain specified diseases which are either clearly stated in the policy wording (in our case) or fall outside of the policy definition of insured “notifiable diseases”.

“NDNA has been in contact with Government officials across the UK to raise concerns that nurseries have about insurance cover as well as the impact closures could have on funding for childcare places.  The current advice remains that schools and settings don’t need to close but we know the situation is changing daily and have been urging governments to include support to the sector in any contingency plans.”

Pound Gates gave this explanatory statement: 

"As a responsible insurance intermediary Pound Gates took steps last week, in response to a growing number of enquiries from its clients (many of whom are NDNA members), to advise that its nursery insurance policy, underwritten by Ecclesiastical Insurance, does not provide insurance cover for any increased costs or lost revenue due to interruption to your business caused by the coronavirus (COVID-19). This is because the cover provided under the policy - in common with that provided by most UK insurers -  is only in respect of certain specified diseases which are either clearly stated in the policy wording (in our case) or fall outside of other insurance providers’ policy definition of insured “notifiable diseases”. 

"We appreciate this position is concerning for nursery owners at such an uncertain time and we feel it is important to provide a general explanation as to why this is the case. Whilst all insurers differ in the detail of their approach they are all required by their shareholders and regulatory bodies to operate in a commercially sustainable way. This is to ensure they are able to meet the cost of insured claims in the long-term and thereby provide continued protection for their policyholders. 

"Insurers use historic data to guide them in terms of the cover they are able to offer and the pricing of it. Where new diseases (or new strains of known diseases) emerge there is, by definition, no historic data available for insurers to be able to predict the potential cost of claims from a UK or worldwide pandemic. The potential therefore exists that if the insurance industry did provide unrestricted cover for a pandemic disease event it would result in their mass failure, leaving policyholders unprotected against other events. It is therefore the case that remedies for issues of this magnitude and extent fall towards the government to be able to respond on a societal basis.     

"NDNA offer a legal helpline service which is free to their members, we recommend members utilise this service. Alternatively, our clients do also still have access to support via our legal helpline (for general advice around contracts and employment matters) and our public relations support service (should nurseries be receiving negative attention from parents on social media). We would encourage nursery owners reading this statement who are not insured via us to contact their insurance provider and ask for clarity on their position in writing."

An Association of British Insurers (ABI) spokesperson said:  

“Commercial insurance policies provide cover against a wide range of risks, that can be tailored to the needs of individual businesses, including extensions to cover.  Businesses who are concerned about this should check the scope of their cover, and speak to their insurance adviser or broker.

“It may be possible to buy consequential business interruption cover for notifiable diseases as an extension to a business insurance policy, subject to any policy  terms and  conditions. Standard business insurance policies are designed and priced to cover standard risks, not those that are very unlikely, such as the effects of Covid-19.

“More generally, all UK insurers are capitalised under Solvency II to withstand a wide range of severe events, including pandemics.”
 
Read the latest advice and guidance on the virus from the DfE can be found here

Latest Coronavirus / COVID-19 advice