Insurance companies are taking a new approach to protecting their assets from potential losses if a Zika virus outbreak spreads, a major shift from years past when companies were typically reluctant to take on risk.
The changes have been largely driven by concerns that Zika could make it more difficult for them to obtain critical insurance, especially as insurers have become more willing to cover potentially catastrophic events.
The latest round of policy changes follows the release of a White House report in October that recommended expanding coverage to cover most Americans.
“As we begin to see the impact of the virus on the insurance market, it’s becoming clearer that there are very significant changes to be made,” said Peter DellaVedova, chief executive of the American Association of Insurers.
“There are real concerns about what this disease could do to the health care industry, especially if we have to do it all by ourselves.”
The changes are being made to address concerns that a Zika outbreak could slow insurance companies’ ability to access insurance and raise the risk that some policies would become uninsurable.
The industry has traditionally tended to be more conservative than insurers and often has not paid out much in claims in recent years, because of a lack of reliable data about the extent of the epidemic.
The insurance industry has been cautious about covering Zika-related catastrophes, and the new policies represent a major departure from its usual approach to covering such issues.
The policy changes are part of a broader strategy to make sure that insurance companies are fully prepared to take a loss if there is a pandemic, said Dan Mendelson, a partner at consulting firm KPMG.
In a separate move, the insurance giants are moving to restrict claims for the first time in more than a decade to cover all potential victims.
The plan, announced Monday, comes as the American Society of Civil Engineers has said that the Zika virus has likely caused about 20 million new cases of microcephaly, a condition that causes infants to be born with abnormally small heads.
The Centers for Disease Control and Prevention estimates that there may be as many as 3 million additional cases of Zika in the U.S. every day, although some experts doubt the numbers.
The insurer plans to restrict coverage for all people who have ever tested positive for Zika, except those who were infected before Feb. 28.
The insurers have said that in most cases they are not willing to pay out claims for people who tested positive in the past.
In some cases, the restrictions could be extended indefinitely, with insurers paying out claims even if people were diagnosed with a new virus and did not get tested for it.
The company will also limit claims for any new or existing Zika-affected people who can’t afford insurance, including those who have health problems and those who are pregnant.
In addition, the insurer will stop covering any Zika-linked cases that are paid out in full by insurers.
The new policy will go into effect on March 12, but it will take effect as early as March 29.
“We will continue to monitor the virus as it evolves,” said Andrew Seifert, the group’s president and CEO.
“This is a global public health emergency, and we want to make decisions to ensure that we can make the most of our resources and that we’re prepared to meet the full range of our obligations.”
The policy is also aimed at addressing a broader concern that some insurers have about taking on risk in the event of an emergency, a change that may also be reflected in their decision to restrict the liability of their insurers from claims for new cases.
While the new policy is being phased in, it will likely take a year or more for most insurers to start paying out those claims.
The moves come as the health industry has taken an increasingly conservative approach to its response to the virus.
The American Medical Association said Monday that it has issued more than 1,400 public health warnings about the spread of the disease and has warned of possible “life-threatening consequences” if it continues to spread.
The group’s executive vice president for health policy, Mark Siegel, said the health insurers are making the most efforts they can to prevent the spread by paying out as much as they can.
But it is still unclear whether the industry will be able to cover everyone who is infected and whether that will be enough to prevent widespread loss of life.
“It’s important to realize that there is going to be a lot of work to be done,” Siegel said.
The most obvious risk, he said, is that insurers could start to cut back on services and coverage in an effort to keep premiums affordable.
The number of uninsured Americans has surged as a result of the pandemic.
The share of people who are not insured has fallen sharply.
Insurance companies, by contrast, have seen the number of people they are covering jump significantly in recent weeks as they have sought to get people off the market.
And some companies have cut back as a way of paying for their