Between 1918 and 1919, the Spanish Flu killed more than 500,000 people in the United States and 50 million people worldwide. Schools closed, companies went out of business and healthcare professionals fought to keep up with one of the most frightening illnesses of the 20th century.
With the emergence and continued spread of the avian H5N1 virus, the medical community believes there is yet another human pandemic on the horizon. According to PandemicFlu.gov, managed by the U.S. Department of Health and Human Services, the reason for the concern is that this flu strain–though it continues to evolve like all influenza viruses–is highly infectious, is spread by migratory birds, and can be transmitted, in some limited circumstances, to humans. Everyone may be at risk at any time of the year. In fact, during the 1918 pandemic, young, previously healthy adults were more likely to die than the very old, very young and the chronically ill.
Should a pandemic occur, the potential impact on the health and life insurance industries could be significant. In addition, because everyone is vulnerable, the disability insurance industry should consider pandemic planning and address how increased claims would be managed, as the probability is high that those fortunate enough to have disability insurance coverage would have to miss work and might file claims.
To exacerbate the situation, short-term disability claims could lead to higher long-term disability incidence, in part because medical professionals, also affected by the disease, would be unable to keep recovery programs in place. With increased numbers of claims to manage, disability insurance carriers would be faced with the need to adjust their claims management practices to adjudicate the various and unique scenarios that may arise, and continue operations under these circumstances.
An October 2006 study led by the Harvard School of Public Health found that 1 in 4 adults said they could not afford to miss work for 1 week. More than 50% "would face serious financial problems if they missed a month of work." Therefore, payment of disability claims will be critical, and individuals will count on disability carriers to pay claims on a timely basis.
Disability insurance carriers–though they can hope for the best–should plan for a scenario that goes beyond standard disaster recovery or business continuity plans. The impact of pandemic-related illness on their own staff could be severe while claims processing volume may be at its highest.
Based on data extrapolated from two previous pandemic flu outbreaks–one moderate and one severe–the Department of Health and Human Services has projected the number of individuals who may be affected by a future pandemic.
When operating in the event of a pandemic, disability insurance carriers may want to consider the following:
Determining eligibility for coverage, and whether an insured satisfied the "actively at work" or "active work" policy provision, may present significant challenges for claims management during a pandemic.
Potential scenarios and solutions are as follows:
o Diagnosed with the pandemic flu. Claims will likely be managed according to normal protocol.
