Coronavirus: Nurseries not covered for 'notifiable diseases'
Wednesday, March 4, 2020
The Government has today formally registered Covid-19 as a ‘notifiable disease’, but nurseries are still unlikely to be covered by insurance for closures.
The move follows concerns raised by small businesses, such as nurseries, about whether they would be covered by their insurance if they have to close to stop the spread of coronavirus.
Registering Covid-19 on the Government's list of notifiable diseases allows businesses to seek compensation if they are affected by the coronavirus.
However, while the Government’s aim is to reassure companies worried about their financial sustainability, if they are affected by coronavirus, it does not fundamentally change the fact that businesses will need to check the small print in their insurance policy documents.
Most insurance companies, including nursery insurers Pound Gates, will not pay out, because most policies do not include cover for notifiable diseases, or only include cover for some of them.
Whether a business is covered will depend on how insurers define an insurable notifiable disease. For example, insurers would typically exclude SARS (a strain of coronavirus), atypical pneumonia, and mutant variations.
As we reported yesterday, nursery owner Philippe Fraser, director of London-based Bilingual Nurseries and Les Petites Etoiles, had been told by his insurer Morton Michel that it would not cover loss of revenue or staff wages if the setting was ordered to close by the Government due to a confirmed case of Covid-19 within the setting.
This is because policies only provide cover in respect of certain ‘notifiable human infectious or contagious disease’ – outlined in policy documents.
Commenting, Mr Fraser said, 'The Government needs to act much more quickly to reassure everyone in the sector. It appears that children are not particularly vulnerable – but to help protect more members of society, the Government is considering closing schools. This is understandable, but nurseries cannot also be expected to pick up the tab for this measure.
'Either the insurance companies should cover this, which they are refusing to do, or the Government needs to intervene. Compared to most European countries the UK has almost no subsidy for the important early years provision. In fact, the biggest “support” they provide PVI settings, the so-called 15 and 30 “free” hours actually are loss making for nurseries! We are fortunate to be able to charge fees at our nurseries that enable us to pay our staff much better than average – but then when something like this happens, the Government needs to step up.
'We have always, and will always, prioritise quality - we are dedicated professionals, who have the honour to look after and educate other people’s children, but we need to be realistic as to the tight margins everyone faces. I am constantly amazed at the work we, and others in the sector, do with almost no support from the tax payer. Now, more than ever, is an important time for Government support and subsidy.'
In a statement the National Day Nurseries Association 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.’
Nursery insurer Pound Gates said, '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”.'
The Association of British Insurers said that standard business insurance policies were not designed for 'very unlikely' risks, such as Covid-19.
An 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.'
The Government’s decision to register Covid-19 as a notifiable disease brings England into line with Scotland. The Scottish Government added the virus to its list of notifiable diseases on 22 February.
A Department of Health and Social Care Spokesperson said today, ‘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.’
Mark Carney, the Governor of the Bank of England, said yesterday that small firms could get a cash boost to fight the effects of the coronavirus.
Boris Johnson also announced today that the government plans to change the rules so people who self-isolate as a result of coronavirus fears can get statutory sick pay from day one.
What is a 'notifiable disease?'
‘Notification of infectious diseases’ is the term used to refer to the statutory duties for reporting notifiable diseases in the Public Health (Control of Disease) Act 1984 and the Health Protection (Notification) Regulations 2010.
Registered medical practitioners (RMPs) have a statutory duty to notify the ‘proper officer’ at their local council or local health protection team (HPT) of suspected cases of certain infectious diseases.
There are 32 other notifiable diseases listed by the Government, including measles, cholera and rabies.