Inside the HVAC Risk and COVID-19 Exposure in Restaurants, Office Buildings

Inside the HVAC Risk and COVID-19 Exposure in Restaurants, Office Buildings

COVID-19 is spread either by inhaling respiratory droplets or, more rarely, touching a contaminated surface and then your eyes, according to the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC). However, aerosol transmission of the disease cannot be ruled out, says WHO, with the possibility that the virus can be transmitted through the heating, ventilation, and air-conditioning systems (HVAC). WHO guidelines state that airborne transmission of the coronavirus may be possible indoors, especially for people who spend extended periods in crowded, poorly ventilated rooms.

Check Out HVAC Systems, Make Modifications

Because of the concern over airborne transmission, businesses located in corporate offices, restaurants, retail stores, and other buildings should take precautionary measures to minimize the potential spread of the virus via their HVAC systems as they phase-in reopening. The optimum measure is to reconfigure HVAC systems to bring in more fresh air to reduce the amount of re-circulated air that potentially carries viral particles. In lieu of shutting down overnight or on weekends, for instance, run the HVAC system without interruption to increase the replacement of air and minimize airflow speeds.

Older systems might require more complex – and expensive – changes like replacing fixed-speed motors with variable-speed motors for greater control and a lower-speed airflow; introducing sophisticated airflow-control systems, such as those that are sensitive to pressure, to allow for smoother adjustment of airflows; and installing high-performance air-purification systems.

The CDC recommends that businesses with HVACs that have been shut down or put on setback during the pandemic lockdown review and follow the guidelines found here: ASHRAE Standard 180-2018, Standard Practice for the Inspection and Maintenance of Commercial Building HVAC Systems.

Low-tech strategies for preventing airborne viral transmission include: rearranging furniture to avoid having several people on the same airflow “corridor”; allowing natural ventilation by opening windows in buildings with basic HVAC systems, which cannot filter or pull in outside air, to increase the exchange of fresh air; and locking windows in buildings with central HVAC systems, when permissible, to reduce indoor temperature changes. Consider using portable high-efficiency particulate air (HEPA) fan/filtration systems to help enhance air cleaning. Also, ensure exhaust fans in restroom facilities are functional and operating at full capacity when the building is occupied.

Outdoor Dining at Restaurants

Several states are only allowing outdoor dining at restaurants due to air circulation concerns and the close proximity of patrons even with reduced seating. California, for example, which initially allowed indoor dining with restrictions in place reversed its guidelines to only permit outdoor dining after a surge in coronavirus cases. According to the state’s latest directives, “an outdoor dining facility must allow for the free flow of outdoor air through the entire space. To meet this requirement, the seating area must have at least three sides open, with no more than four-foot-high walls that do not impede the free flow of air through the space. Umbrellas, canopies, awnings, and other shade structures are allowed only if they do not have sides.”

In addition, the CDC concluded that an asymptomatic patient in China transmitted the virus to families at two nearby tables in a restaurant, according to a report by McKinsey. “Based on the restaurant layout, seating arrangements, and smear samples from air-conditioning inlets and outlets,” the report indicated that “the CDC found that the coronavirus was likely transmitted when strong airflows from a nearby air conditioner spread large droplets from the infected person. These droplets traveled more than one meter—further than usual, but less than the distance aerosols can typically travel.”

While the HVAC systems in the transmission and mitigation of COVID-19 in buildings are yet to be fully tested and confirmed, proper design, installation, and maintenance of these HVAC systems are key to maintaining healthier indoor air quality and more efficient built environments.

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Commercial P&C Insurance

Commercial Office Space Set for a Strong Comeback

The sustained increase in demand for office space across the nation since late 2022 suggests that the market has moved past its lowest point, according to insights from the real estate technology platform, VTS. Demand for office space began to rise in late 2022 and continued into early 2023. Since then, the office market has experienced a period of stability and growth, supported by favorable economic factors, indicating a market rebound. This conclusion is drawn from the VTS Office Demand Index (VODI), which tracks unique new tenant tour requests for office properties in key U.S. markets. The VODI serves as an early indicator of future office leasing activity. According to the index, demand for office space has grown consistently over the past 12 months, closing the second quarter with a 17% year-over-year increase and a 34% rise from the VODI’s lowest point in December 2022. A significant shift in office-based employment patterns further supports the belief that demand for office space has stabilized. After reaching its peak in August 2022, office-based employment declined by 3.9% in early 2024. However, this trend has since stabilized, and employment growth has remained steady. Additionally, a recent decrease in work-from-home rates has fueled the renewed demand for office space. “They say you can only recognize a market bottom after it has passed, and the office space market is no exception. Following what we now see as the bottom, the national demand has gradually increased, though it remains susceptible to economic challenges,” said Nick Romito, CEO of VTS. “However, the growth observed in VODI over the past 18 months, coupled with positive trends in the office-using workforce, suggests that the market has reset, and the worst is behind us.” It’s important to note that this national trend does not impact all local markets equally. Cities like Los Angeles and New York City have seen healthy growth in office space demand, while markets such as San Francisco and Washington, D.C., have experienced prolonged stagnation. In Los Angeles, office space demand surged in the second quarter, briefly surpassing pre-COVID levels, driven by an increase in the average size of office spaces sought by tenants. New York City followed a similar overall pattern, though with some softness in the second quarter. Conversely, San Francisco’s demand for office space remains unpredictable, largely due to its tech-focused workforce, which continues to favor remote work more than other industries. “Markets heavily dependent on the tech sector, like San Francisco and Seattle, are on a markedly different post-COVID recovery path compared to more diversified markets like Los Angeles and New York City. It may take some time before we see office demand in San Francisco and Seattle return to pre-COVID levels,” added Ryan Masiello, Chief Strategy Officer at VTS.

Cyber Liability

Global IT Outage Puts Business Interruption Insurance in the Spotlight

In July, a global IT outage had a significant impact on business interruption insurance policies, overshadowing the effects on cyber insurance coverages. “This incident wasn’t a result of a malicious attack, which is why typical cyber insurance policies may not have been activated,” explained Peter McMurtrie, a partner in West Monroe’s insurance sector, in an interview with PropertyCasualty360.com. “Where coverage was applicable, factors like deductible amounts, waiting periods, and coverage limits played a critical role in determining the extent of exposure,” McMurtrie noted. “Standard policies for small businesses were less likely to offer coverage, while more complex policies for mid-sized companies and Fortune 500 corporations may have included broader triggers for non-malicious outages caused by third-party software issues.” The outage was triggered by a software update on July 19, 2024, by cybersecurity firm CrowdStrike, which affected organizations worldwide using Microsoft Windows. This interruption had far-reaching consequences, including disrupting hospital systems, media outlets, financial institutions, delaying thousands of flights, and halting daily business operations. McMurtrie emphasized that while the initial impact of the outage was similar for both large and small businesses, the ability to recover operations and whether insurance covered the loss of business income varied. “Larger companies are more likely to have advanced disaster recovery plans that ensure service redundancy following unexpected outages,” he added. “Their insurance programs also tend to cover a wider range of incidents.” According to Microsoft, the CrowdStrike update error affected over 8.5 million Windows devices globally. The incident highlighted the interconnected nature of our global ecosystem, including cloud providers, software platforms, security services, and their clients. “It’s a stark reminder of the importance of prioritizing safe deployment and disaster recovery across the tech industry,” the company said in a blog post. McMurtrie pointed out that the outage’s widespread impact was largely due to its effect on organizations that are critical to societal infrastructure—sectors like agriculture, airlines, banking, energy, government, healthcare, manufacturing, and retail. “Insurance companies base their risk appetite on their ability to understand and price risks appropriately. This becomes increasingly challenging with emerging threats,” he said. “However, I anticipate that insurers will respond by clarifying policy language, refining risk selection criteria, and possibly developing new products specifically designed for this evolving exposure.”

Inside the HVAC Risk and COVID-19 Exposure in Restaurants, Office Buildings