COVID-19 Insurance Update: 1 May 2020

In a press release issued this morning, the Financial Conduct Authority (FCA) announced it intends to ask the courts to rule on whether a ‘representative sample of the most frequently used’ BI policy wording provide cover for COVID-19 related losses. Christopher Woolard, the FCA’s interim CEO confirmed the “intended court action is designed to resolve a selected number of key issues causing uncertainty as promptly as possible and to provide greater clarity for all parties, both insured and insurers.”

The FCA is writing to a small number of insurance companies to ask them to provide clarification on their position by no later than 15 May 2020. Based on the information obtained, the FCA will consider which firms to ask to join the court process. The development is against the background of the UK Government having confirmed it will not seek to retrospectively amend contracts.

Elsewhere, Prime Minister Boris Johnson has said that he will set out a “comprehensive” plan next week on how the government will “unlock” the economy. Although the road map and menu of options for the exit strategy will be published next week, the dates and times will depend on data. The plan will contain three elements: how to get the economy moving; how to reopen schools; and how people can travel to work safely and make workplaces safer.

Responding to a question from the BBC on the impact of the lockdown on the economy, Johnson said it is “vital” that if the UK is to bounce back it must avoid a second spike that would have “lasting economic damage”. Johnson said that the economy must therefore be unlocked “gradually” and the UK Government will consider ways to supress the disease alongside this.

In this edition, we consider the potential implications of COVID-19 for the Singapore political risk and trade credit market. Falling commodity prices, increased governmental intervention, and rising insolvencies of businesses are all likely to trigger insured losses. We outline some of the important initial steps for claims professionals, recognising that they, like insurers, face unique and challenging claim scenarios. As always, preparation and timely investigation will be key.

Recognising that the UK Government is calling on organisations from a variety of industries to help solve the country’s COVID-19 ventilator shortage, we offer some key points an organisation should consider when considering manufacturing ventilators, especially if it is a non-medical organisation. In particular, we look at the regulation of medical devices in Europe, product liability issues and patient safety concerns.

Continuing with patient care, we consider some of the ethical and legal challenges for the UK healthcare system. Treatment of patients tends to be centred on a best interest approach to decision making, but if demand for the exhaustible supply of resources exceeds their availability, treatment in a patient’s best interests may not be possible – raising a host of profound questions.

In the area of highway network safety, we examine the possibility of claims that may arise due to the condition of the highway. Contemplating that the biggest risk in highway claims is going to be the courts consideration of any interim highway policies, we suggest some practical considerations to mitigate the claims potential, including looking at the role of technology in providing new ways of assessing the highway network.

In the professional indemnity space, we consider the effect the pandemic will have on the claims profile against solicitors. We address the possible ramifications the market may suffer both in the immediate short term before October 2020 renewals and through a longer lens, by a possible economic recession into 2021 and onwards. In a similar vein, we contemplate potential claims against construction professionals and the impact of the crisis on ongoing and future disputes. 

In the construction industry itself, as more sites are closed, a greater number of employers and contractors are now beginning to examine the services of design consultants. We look at the possible impact on professional appointments, recognising that parties are now seeking to avoid a situation in which ongoing design overtakes the actual progress of the project.

And we consider the European Commission proposal to amend key regulation in the aviation sector, which we expect to be welcomed by the sector, as it introduces some much needed relief measures following the ongoing impact of the pandemic.

Finally, we are delighted to confirm that Mark Lloyd will be speaking about how English shipping law has responded to the crisis on 5 May, for the Maritime London COVID-19 webinar series. Mark will consider what will the 'new normal' will be for the sector once lockdown has been eased.

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