COVID-19 Insurance Update: 15 May 2020

Our latest thinking into the insurance impacts arising from the ongoing crisis is offered against a positive step in the UK exit strategy. Abbott and Roche have now both been approved to provide COVID-19 antibody tests in the UK, with Abbott reportedly ready to ship “five million tests to the UK each month with immediate effect”. The Government described accurate antibody tests as a potential “game changer” but have cautioned that they will not assist in the easing of lockdown for some time, given that it was not clear whether people who have had the disease become immune.

Elsewhere, The Welsh Government will publish its exit strategy today. A 'traffic-light' style roadmap is expected. France is to impose a 14-day quarantine on people arriving from Spain from today, the “Baltic bubble” will open today, allowing people in Estonia, Latvia and Lithuania to travel freely between the three countries and in Australia, some pubs and restaurants are beginning to reopen with different restrictions in place across different regions. Australian rules football will resume training next week and the 2020 season will restart on 1 June.

Whilst such events are encouraging, many sectors and wider business continue to experience difficulties. Indeed, The Asian Development Bank believes the COVID-19 pandemic could cost the global economy between $5.8 and $8.8 trillion, the equivalent of between 6.4 and 9.7 per cent of the world's economic output.

Meanwhile, and closer to home, the Financial Conduct Authority (FCA) has issued a further press release today to provide an update on the steps it is taking before it issues declaratory proceedings on behalf of policyholders who have had claims for BI losses declined by insurers. At this stage, the FCA is inviting policyholders and insurance intermediaries to provide the details of unresolved disputes to allow it to consider as part of the test case. The information is sought by Wednesday 20 May.

We start this edition by looking at the impact of closed business with regard to unclaimed cargo. The lockdown has left many containers locked up in ports and warehouses – making those goods held up in the supply chain increasingly vulnerable to theft and damage. We consider some of the interesting challenges that arise under cargo policies. 

As the race to find treatments and ultimately a vaccine for COVID-19 intensifies, we consider vaccine development and compulsory licensing. Regulators and lawmakers will be faced with a careful balancing act between legal, medical and ethical considerations when seeking to take decisions that may unlock potential solutions.

We discuss the Emirates Group profit results in the context of the various economic challenges presented by the pandemic and how airlines are attempting to survive in the new dawn of COVID-19.

Staying with travel, we explore the defences available to UK tour operators over pre-departure cancellations following the outbreak. Recognising that it was never the intention of the Package Travel and Linked Travel Arrangements Regulations 2018 to cover such wide-scale interruption as we have seen since, we consider what options tour operators have.

We consider the risk potential of an increase in claims for breach of landlord’s repairing obligations, and offer some practical considerations including with regard to risk assessment and routine inspections.

More broadly, we look at the risk of claims farming in the injury space and conclude that the level is high. Our analysis indicates increased activity of claims management companies and that we will see more claims for compensation as a result of the pandemic.

Turning to employment, we offer our thoughts on the judgment handed down by the Court of Appeal on 6 May in the Debenhams case and the application of furlough schemes to companies in administration. We conclude that the message to the government is clear. Either the terms of the furlough scheme itself needs to be clarified and/or emergency legislative changes need to be put in place to address these super-priority payment issues.

And we consider the effect of the pandemic on employment practices liability (EPL) claims both immediately and in the longer term. We recognise that furlough, amongst other grounds, may provide grounds for such claims. Overall, we offer our view that the number of new EPL claims is likely to dip in the current period and then begin to rise as the lockdown eases.

Looking forward to likely challenges for dispute resolution, we look at the future of marine dispute resolution in England and Wales and ask what the ‘new normal’ might look like from a technological, logistical and practical angle. Whilst the English legal system has clearly responded in a positive manner to an extraordinary set of circumstances, we foresee an increased role for the use of new technology.

However, as with all of the issues presented by COVID-19, we are in uncharted territory. The coming weeks and months are likely to continue to be interesting times for all those involved in insurance.

Links to all articles included in this update:

• Unclaimed cargo - a consequence of coronavirus? Part 1
• COVID-19: vaccine development and compulsory licensing
• COVID-19: Emirates Group records 32nd year of profit; airlines fight for survival
• Exploring defences available to UK tour operators over pre-departure cancellations following the COVID-19 outbreak
• COVID-19 and housing disrepair claims in the UK
• COVID-19 claims farming, risk level: high
• The story continues: Debenhams and the application of furlough schemes to companies in administration
• COVID-19: the implications for EPL claims