(Adds dropped words from Allianz executive's title in 10th paragraph in story from June 18)
By Suzanne Barlyn
June 18 (Reuters) - Commercial insurers are scrutinizing building managers' efforts to avoid outbreaks of Legionnaires' disease as they re-open movie theaters, gyms, schools and offices that had been closed for months due to the coronavirus pandemic, industry sources told Reuters.
Legionnaires' disease is a severe, sometimes-lethal form of pneumonia caused by the Legionella bacteria that builds up in pipes. Environmental insurers, which collect roughly $2 billion in annual premiums, would be on the hook for damages if there are outbreaks at buildings they cover.
"Legionella could be the deadliest waterborne illness in the U.S. and another deadly consequence of COVID," said Veronica Benzinger, environmental service group leader for insurance broker Aon PLC, referring to the illness caused by the novel coronavirus.
The pandemic shutdown of businesses and schools has led to an unprecedented amount of stagnant water in dormant buildings. It becomes a breeding ground for Legionella bacteria, which can be spread from toilets, sinks, showers and air-conditioning systems.
Some insurers are intensifying Legionnaire's precautions before adding new clients or renewing coverage, insurers and brokers said. For instance, they may ask customers to document how they maintain plumbing and cooling systems.
Large commercial office buildings and manufacturing plants have professional maintenance staff who likely kept water flowing throughout the crisis. Smaller buildings that insurers cover are at higher risk, experts said.
To avoid contamination, they must flush and sanitize pipes and disinfect cooling towers that use water to lower air temperature, they said.
The bacteria and disease get their name from a deadly outbreak following a 1976 American Legion convention in a Philadelphia hotel. The bacteria was ultimately discovered in the cooling tower of the hotel's air conditioning system.
Nearly 50,000 people have been infected with Legionnaires' disease between 2000 and 2015, according to the U.S. Centers for Disease Control and Prevention.
Allianz SE has added Legionnaires' prevention to broader discussions with large industrial clients about the coronavirus pandemic, said Scott Steinmetz, global head of risk consulting within MidCorp, part of an Allianz specialty insurance unit.
Allianz has engineers helping customers prepare for reopening, he said. Allianz and AXA SA are also sending bulletins to clients about water system maintenance.
Insurers might limit Legionnaire's coverage amounts or impose higher deductibles if building systems are outdated, brokers said.
Insurers were already worried about possible outbreaks, because of elevated lawsuits and claims. They are stepping up their scrutiny even more due to the coronavirus pandemic.
In April, Illinois agreed to pay $6.4 million to families of patients who died of Legionnaires' disease at a state-run veterans home. Other deaths have occurred in New York and Michigan. (Reporting by Suzanne Barlyn in Washington Crossing, Pennsylvania Editing by Lauren Tara LaCapra and Bill Berkrot)