Insurers forced to rethink cover amidst Ebola, Andes hantavirus outbreak

AM Best says firms are prepared for direct costs but portfolios need fresh stress tests.

Recent outbreaks of the Ebola virus and Andes hantavirus are forcing the insurance industry to re-evaluate how it covers rare infectious diseases.

Whilst health experts state that neither virus poses an immediate global threat on the scale of COVID-19, the World Health Organization (WHO) has warned that rising Ebola cases and deaths indicate a larger outbreak is possible, according to a report by credit rating agency AM Best.

AM Best reports that insurance companies are currently well-prepared to handle the direct financial impacts of these outbreaks. 

“Since the pandemic, insurers have increased investments in areas such as telehealth and digital or automated processes, as well as addressed policy ambiguities through re-underwriting,” Sridhar Manyem, AM Best’s senior director of industry research and analytics, said in the report.

They have also redrafted contracts to eliminate ambiguous language regarding coverage gaps and systemic vulnerabilities.

In a separate report, the Asia-Pacific individual health insurance market is projected to grow at a compound annual rate of 5.91% through to 2030, driven by a sharp rise in post-pandemic health awareness and rising medical costs.

According to Grand View Research, the regional industry was valued at $1.63t in 2022.
Consumer data highlights a significant shift in public attitude toward comprehensive medical coverage following the COVID-19 pandemic. 

A survey by Max Bupa Insurance revealed that prior to the pandemic, only 32% of people bought comprehensive plans, and 41% intended to do so. 

Since the pandemic, those figures have risen to 55% for purchasers and 60% for intenders.

Rising out-of-pocket medical expenses and expanding government initiatives are also accelerating market growth. 

However, AM Best said these health crises could still slow down the global economy at a time when geopolitical conflicts are already driving recession fears. 

The economic impact could worsen in areas already affected by conflicts in the Middle East. 

Additionally, the Ebola spike comes as several African nations face rising debt burdens alongside a decline in international donor funding for health crises.

AM Best warns that even if these viruses remain localised, they could still severely damage economies that rely on tourism. 

The agency concluded that modern global mobility allows diseases to spread rapidly, making local containment difficult without international coordination. 

As a result, insurers are being advised to regularly stress-test their portfolios against unexpected, non-modelled risks rather than relying purely on geographic diversification.