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Blog: New beginnings for PI claims

New normal

As we emerge out of Covid-19 and into the ‘new normal’, claims specialists are speculating what the future of insurance could look like. Peter Hamberger, head of claims – professional risks at Tokio Marine HCC, explains how the past year has impacted professional indemnity claims and outlines predictions for the future.

Peter Hamberger, head of claims – professional risks, Tokio Marine HCC

It is broadly anticipated that there will be an upturn in claims for the professional indemnity market, as in previous recessions.

To date, waves of Covid-19 linked notifications have hit some sectors, such as accountants, including alleged registration failures around the furlough scheme. With the scheme further extended, it’s almost certain there will be more of the same in the future.

In addition to accountants, another significant emerging area relates to property management claims. Inevitably, many tenants have struggled to make rental payments and as eviction restrictions lift, there will be potential for more claims in both directions. Tenants are expected to argue incorrect eviction; and landlords will claim inadequate referencing checks on tenants who defaulted. For commercial properties, where tenants break leases through financial difficulty notifications are expected; or as they move to a more flexible working model, with less need for office space. 

The show must go on  

While few industries have been unaffected by the pandemic, entertainment has been particularly hit. At first, film and television appeared no exception. Nearly all productions were halted last March and as the pre-filmed stock dwindled, it seemed no new material would air unless significantly hampered in quality (remember the BBC begun running out of episodes of EastEnders). Fortunately, the industry proved resilient and, given its nature, extremely creative in keeping the cameras rolling. Sets imposed social distancing measures or used glass screens hidden from the viewer when broadcast. Producers have provided cameras for presenters to film shows from their homes – for example, garden writer Monty Don used remote-controlled cameras to film an entire series of Gardeners’ World.

It is no surprise that the past year has been an unexpectedly busy time for underwriters – and claim notifications have not dropped either. While the nature of the claims has not fundamentally changed –  for example, infringement of intellectual property rights; or a failure to obtain the necessary clearances or licences – the speed with which producers have adapted has necessarily put pressure on both them and their legal teams.

However, the need to innovatively keep productions moving will not be a defence to any claim. To comply with policy terms and conditions, insureds must ensure that they are as thorough with these pre-broadcast checks as they were pre-pandemic. As the saying goes, ‘act in haste, repent at leisure’.

Working trends

The past year has encouraged people to evaluate what is important. With time on their hands, many “kitchen table entrepreneurs” have taken the plunge and started their own businesses. It is estimated that from April to June 2020, there were 160,000 new businesses – more than three times the average number of start-ups for that quarter over the previous decade. The ability to work from home and achieve that sought after work-life balance is likely to be a huge motivation going forward.

However, in the initial work from home and start-up frenzy, combined with the urgency for business continuity, IT Security and complying with General Data Protection Regulations can often become an afterthought. Whether an established company has moved to home working during lockdown; or a brand-new business: the threat of an online breach is very real. Data from May 2020 evidenced a 337% increase in reported phishing scams, since the start of lockdown in March, with many businesses using systems not previously relied upon in the traditional office environment.

The need for agile working speedily accommodated does not negate the legal obligations to consider the impact of new systems and keep personal data safe.  

New normal

There has been a lot to think about over the last year and going forward as businesses consider their future. However, PI insurance remains as important and necessary as ever, wherever your place of business: office, home or in the garden.

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