We often see a spike in claims and complaints against professionals following any economic downturn. When times are tough, businesses and individuals feeling the pinch will try to recoup any losses wherever possible - including from their professional advisers.This was demonstrated by the spike in claims against professionals arising from the residential housing crash, which particularly affected solicitors and surveyors as lenders sought to recover their losses following borrower defaults.
Economic hardship sustained by individuals and business as a result of the current COVID-19 outbreak could lead to a general uptick in claims and complaints against professionals. Businesses and individuals offering professional advice and services should revisit their risk management strategies accordingly.
What should professional advisers be doing?
Business continuity planning is key to ensuring that in so far as possible, delivery of professional services can be maintained. Practices should plan for the possibility that workers, from the board room to the shop floor, could be unable to attend work, for example if employees are advised by a healthcare professional to self-isolate. If remote working is an option for your organisation, take steps now to test its effectiveness and iron out any challenges.
If service delivery might be impaired, act now by considering and planning for possible disruption. Assess and plan for possible breakdowns in your supply chain. Look ahead to time-critical events anticipated during the coming weeks as there could be a narrow window of opportunity to manage any risks. Are there deadlines imposed by contracts or the law that might be at risk of being breached? Check whether there are specific provisions, either in standard terms and conditions or appointments that may offer respite.
Bear in mind that a large proportion of complaints and claims arise from a failure to communicate effectively. In the main, problems occur where a customer or client's expectations do not match the service that the professional ultimately delivers.
Opening lines of communication with clients or customers and warning them of any issues ahead will be key to avoiding complaints or claims which could otherwise arise due to the current situation. Try to adhere to your usual risk management procedures. Simple steps, such as record keeping, can be first to slip where there is increased pressure of business; but being able to show that suitable advice or warnings have been given can be crucial to claims or complaint defensibility.
Will professionals be protected by insurance?
This depends upon the terms of the policy and the type of claims that may arise.
If the ability to deliver professional services is impaired in a way which could give rise to a complaint or a claim against a practice, then it's important to consider whether to notify (or at least make reasonable efforts to notify) the circumstances to brokers or insurers to preserve possible cover.
Most professional indemnity (and other) insurance policies require prompt intimation and whilst in ordinary circumstances insurers are usually prepared to afford policyholders some leeway, it is easy to imagine that some may interpret polices more strictly in the event of an increase in insurance claims arising due to the current outbreak.
Take Action
- Prepare and implement a suitable business continuity plan which identifies any risks which could impair the delivery of professional service
- Maintain suitable risk management practices, including record keeping
- Check current policy terms for details of coverage including in relation to business interruption and adhere to any obligations upon the policyholder
- Be aware that certain policies may not cover disruption or losses caused by COVID-19, for example due to force majeure or other exclusions, though the relevant policy terms will need to be reviewed carefully
- If in doubt about coverage, seek advice from a broker or suitably experienced legal professional.
