crawling the sheets in hotels, apartment buildings and college
dormitories in surging numbers, which has spawned a new enterprise
for insurance companies.
The tiny, reddish bugs, ranging to about 7 millimeters, or the
size of Lincoln's head on a penny, hide in dark places like
vampires during the day and suck human blood at night. Unlike those
other blood-thirsty parasites, head lice, bedbugs are extremely
hard to wipe out once they infest, and the cost can be very
Infestations of any kind - bugs, rats or cockroaches -typically
are excluded from commercial property insurance policies. The cost
of eradicating pests was a maintenance expense, meaning it was not
covered by insurance, up until recently.
Insurers, like most of us, didn't want to get near the bugs.
But increasing pressure from lawmakers to require coverage,
along with high demand from hoteliers and property owners to
protect themselves from financial loss during an infestation, has
created a new market.
Last month, bedbug insurance coverage was offered for the first
time by two national brokerage firms, Aon Risk
Solutions of Chicago and New York-based
Willis North America;
and also NSM Insurance Group of Conshohocken, Pa., an insurer.
"You've got legislators in the state of New York Assembly who
are trying to make this mandatory that insurance companies do
this," said John Lafakis, senior vice president at Willis North
America and program manager for the bed bug recovery insurance. "So
we figured, 'You know what, we're going to beat everyone to the
The brokerage firms are leaping into an area that has exploded
after years when bedbugs were rarely reported, seemingly a
forgotten annoyance from another era.
"Ten years ago it was considered a minor pest issue," said Greg
Gatti, a director at Aon Risk Solutions.
Bedbugs have grabbed headlines as more and more people report
the telltale red welts after staying in hotels and living in
Hotels could spend an average $600 to $800 per room to eradicate
bedbugs, according to experts in Connecticut. That says nothing of
lost income if an infestation becomes public knowledge - on
websites such as bedbugregistry.com, or in the media.
Nutmeg State Plagued
The state office that fields questions from people asking about
bedbugs, the Connecticut Agricultural Experiment Station in New Haven, had only two inquiries in
1996. Reports started coming in more regularly in 2003 in all major
cities across the state, said Gale E. Ridge, an entomologist who
specializes in bedbugs at the experiment station.
Ridge is also chairman of the Connecticut Coalition Against Bed
Bugs, which brings together bug researchers, pest control services
and other interested parties. She recorded more than 900 reports
from people who suspected they had bedbugs in the fiscal year that
ended June 30, 2010, and the numbers are double or triple that for
the year that ended June 2011.
The insects are now in every corner of the state. "We have a
very active population here," Ridge said.
Bedbugs aren't known to spread disease, but they can be an
annoyance because of itchy welts from their bites and the loss of
sleep they cause, according to the federal Centers for Disease Control and
The Connecticut trend mirrors what is happening across the U.S.
First, bedbug reports were coming out of larger urban areas. Now,
they are more widespread, affecting every town in the state, Ridge
Occasionally, a person will mistake Eastern bat bugs (Cimex
adjunctus) with bedbugs (Cimex lectularius), which are similar in
the way they look and behave. Bat bugs typically signal that bats
are living in the eaves or attic.
What's the difference?
Bedbugs are small, flat parasites, retreating by day to hiding
places in bed frames, floorboard cracks and other dark corners.
"Actually, they'll hide anywhere. I've found them in electrical
outlets and … in TV remotes," Ridge said. "They don't like to be on
you, your person. You are the food source, and they want to get off
of you as soon as they can and get back to their refuge."
The bedbug population is spreading, due in part to the fact that
chemicals once used to kill them, such as DDT, are illegal because
of the human harm and environmental damage associated with the
chemical. DDT, for example, is a probable human carcinogen that
damages the liver and reproductive system. It pushed bald eagles
and peregrine falcons near to extinction decades ago before it was
outlawed in the U.S. in 1972.
Modern-day bugs have mutated to become resistant to neurotoxins,
helping the population to grow, though a pest control company can
resolve an infestation if the colony of bugs is detected early.
Bedbugs also are spreading because more people are traveling
internationally, unwittingly bringing back the nasty stowaways,
Ridge said. Sometimes, people notice bites within a few hours, but,
for others, it can take two weeks for the bites to show up,
particularly the first time a person is bitten. That delay can
exacerbate the spread.
Colonies of bedbugs are able to survive in
condominium complexes and other multi-family housing arrangements
because they travel from one home to another unless the entire
building is treated.
Covering Bugs In The Covers
New lines of bedbug insurance announced last month by Willis and
Aon, sold as separate lines of coverage, already have taken off,
according to insurance brokers. Annual premiums for policies sold
so far this range from $3,000 for a 100-room hotel in Oklahoma City
to $150,000 for eight state colleges with 36,000 beds in New Jersey, said
Lafakis, the Willis North America broker.
"People have been clamoring for this coverage for God knows how
long," Lafakis said. "It really didn't exist."
Whether the coverage sells well to hotel owners will depend on
how it's priced, but there is certainly a demand for bedbug
insurance, said Joe McInerney, president of the American Hotel
& Lodging Association. Bedbugs are a recent concern that hadn't
been a problem for hotels in decades, and with every new arrival at
a hotel comes the possibility of unwanted guests.
"We don't grow them in the basement and send them up for a
midnight snack," McInerney said. "Somebody brings them in."
A greater chance of getting bedbugs and all the costs of casting
them out may make insurance more attractive, he said.
The Willis coverage, for example, includes decontamination
services, rehabilitating expenses, lost profit due to business
interruption, crisis management - including a 24-hour/7-day-a-week
hotline, coordination with regulatory authorities, risk control and
Willis North America is a broker for policies by Professional
Liability Insurance Services Inc., of Largo Vista, Texas, and is joining
with Orkin LLC of Atlanta for pest control services. Willis employs
about 100 in Connecticut.
Aon Risk Solutions, which employs 641 people in Connecticut, is
an insurance broker for Global Excess Partners policies, and both
are teaming with Memphis-based Terminix for pest control.
"We had immediate reaction, not only from our current and
prospective real estate customers, but also from our hotel and
hospitality customers and have had a lot of interest from our
higher-ed practice, which includes the universities and colleges,
and to date, we have 15 indications out to major corporations
around the country," said Gatti, the director at Aon Risk
Bedbugs have made hoteliers very anxious.
"Everybody freaks out," Lafakis said of a hotelier discovering a
bedbug infestation. "You've really got a problem. The landlords,
and the property owners and the hoteliers, they've got to run a
business, and now they're freaking out that they don't know how
many rooms are infested, 'What have we got to do, is this going to
make the front page of the New York
He added, "There's hysteria, but it's justified. People's lives
are turned upside down by this."