Newsletter Sign-up

While the risk of an avian flu pandemic is flying on radar screens, only a small percentage of companies have taken steps toward building pandemic preparedness plans, according to risk executives.

Yet some in the retail industry are already feeling the pandemic pinch, despite the lack of human-to-human transmission cases.

Operationally dependent upon both their employee and customer populations, smart retailers are already considering methods of riding out the avian storm even if scores of employees are stricken with illness and customers are too paralyzed by fear to come out and shop.

One answer is to shift to a heavier focus on online sales to accommodate customers afraid to leave their homes. Retailers are also exploring questions about which segments of their employee population would be eligible for temporary telecommuting, as well as the disability benefit option available to those employees stricken by the avian flu.

Although most companies aren't far past the "we've-formed-a-committee" stage of planning, at least they're acknowledging the risks, rather than taking the foolhardy view that pandemic risk is merely something the media has whipped into a froth.

Whether an avian flu mutates and jumps from one human being to another, we will have to wait and see. More mundane worries filled the halls of the annual convention of the Risk and Insurance Management Society Inc. in Honolulu in April.

With hurricane season around the corner, the property and business interruption losses, and the resulting claim headaches from last year's Three Sisters, Katrina, Rita and Wilma, filled the minds of many.

Mary Lynn "Mel" Banks, the risk manager of Omni Hotels, said the market is looking much different than the one that insurance buyers faced after Sept. 11, 2001. Whereas five years ago, the terrorist attacks sent most if not all lines spiraling out of control, post-Katrina, the casualty market still appears stable and unaffected. It's really only the property CAT market that looks bad.

And bad it is. Right now, it's looking worse than New Orleans after Katrina. The mess in the property catastrophe market is likely to remain for a while. At least 170 court cases have been filed in the Gulf that deal with wind versus flood, on top of the high-profile cases put out by the Mississippi Attorney General, Jim Hood, and by tort king Dicky Scruggs.

Until this issue is cleared up, don't expect the market to settle.

June 1, 2006

Copyright 2006© LRP Publications