17 June 2021

As restrictions lift and the world of business resumes, trepidation grows for Professional Indemnity insurers who are likely to be faced with an increase in claims related to COVID-19 adapted business procedures.

Although it is still too early to determine the full impact that COVID-19 has had on claims since we were plunged into a world of lockdowns and remote working in March 2020, there has been much speculation around post-COVID PI claims trends. Inevitably, this involves a degree of crystal ball gazing, but what follows is our best guess on a few sectors expected to be affected:

Surveyors and Valuers

A suppressed housing demand, an emerging desire for gardens and private outdoor space, and buyers having been able to raise more for new house funds during a time when they weren’t able to spend on anything else, have all led to a soar in house prices in the last 12 months.

This was compounded even further in July 2020 when the government announced a stamp duty holiday.

Many believe that this landscape can’t last with the Bank of England having previously suggested a 16% fall in house prices by the end of the year. Surveyors are being challenged on property valuations considered as having been ‘down-valued’ in areas where recent sale data indicates that considerably higher prices are capable of being achieved. Conversely, however, they may also find themselves on the end of claims later brought by disgruntled homeowners who find themselves in negative equity as a result of overzealous valuations prepared during an uncertain market.

Home Reports now feature disclaimers advising that “property market activity has been impacted due to the current response to COVID-19. This has resulted in an unprecedented set of circumstances on which to make a valuation judgment”. However, will a short comment advising that less certainty can be attached to valuations be enough to stave off claims?

Legal (and other) Professionals

Firms may experience an increase in claims relating to inadequate or inaccurate advice as a result of remote dealings with both clients and employees – communication is vital and face-to-face consultations provide an opportunity to ask questions and seek clarity on complex and nuanced legal points that emails don’t. This is even more of an issue for elderly clients who do not have access to emails or video conferencing applications. Trust is established through rapport, but this can be impossible to build through words on a screen.

Partners are unlikely to have been able to supervise less experienced staff to the same degree that they are used to in an office environment. This may have led to missed deadlines and a general failure to deliver the level of work clients expect. Service issues may rapidly escalate to fee disputes, complaints and, inevitably, an increase in claims.

Leaving interpersonal aspects to the side, physical barriers have had a particular impact on private client practitioners for whom face to face meetings are crucial in order to be able to take instructions, assess capacity and arrange the execution of documents such as wills. We have seen, and anticipate more, claims stemming from the sort of situation where a testator has been admitted to a care home or hospital, to which access is restricted, and has sadly passed away before testamentary instructions could be implemented.

Finally, as professionals shift from home working to a more flexible model involving moving between home and office, the likelihood increases of claims stemming from data loss or data security breaches. For example, the phone or laptop being left on a train, or the memory stick being dropped in the rush to catch one.

Education

It has been widely reported that the move to online learning has led to an overall reduction in supervised teaching hours for many students. Additionally, students studying courses involving considerable practical elements have complained that zoom calls can never replicate the hands-on laboratory experience they signed up for. The problem is all the more acute in the case of students who are paying tuition fees or accommodation costs and may consider themselves entitled to greater accountability.

In the immediate aftermath, schools, colleges and universities may face claims around the assessment of work and, in the case of colleges and universities, around the operation of admissions policies and procedures. Allegations of discrimination are likely to feature in these. They may be faced with value for money claims in respect of the tuition fees they have collected, despite being unable to offer a full teaching experience during the pandemic, but they may also experience so called “failure to teach” claims arising further down the line, when ill equipped students are faced with difficulties when trying to secure graduate jobs in years to come.

The above are but some of the issues which may arise across a number of sectors. There may be more, however for that, we may need to call upon Mystic Meg for guidance.

Rebecca O’Hear, Solicitor: roh@bto.co.uk / 0141 221 8012