Miscellaneous professional indemnity
In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for miscellaneous professional indemnity.
Key developments in 2020
Miscellaneous professional indemnity remains a difficult category in which to identify sector wide trends. Whilst it has become a class of business in its own right, there remain lots of different areas to it, each of which has its own particular trend.
In our last review, we noted that claims against Approved Inspectors may continue to increase in light of:
(i) the Hackitt Review following the Grenfell tragedy and
(ii) Insurers' increased desire to target recovery claims from sub-contractors.
However, largely as a result of the decision in Herons Court v NHBC Building Control Services Limited, which was supportive to the arguments being put forward by Approved Inspectors, and the consequent difficulties that claimants have in particularising exactly what duty the Approved Inspectors breached, and how this caused loss, we have seen the number of claims against Approved Inspectors dwindle in 2020.
We expect that this trend will continue, following the publication of a draft Building Safety Bill by the Ministry of Housing, Communities & Local Government in July 2020. The draft Bill contains a number of major changes, including the transfer of Approved Inspectors' functions to registered building control approvers. If the Bill is passed, builders and developers will no longer be able to choose their own building control body.
What to look out for in 2021
Predictions for next year are obviously heavily influenced by what has happened during the COVID-19 pandemic. We have highlighted two areas of business, that would fall within the "Miscellaneous" category that we believe risk seeing an increase in claims during 2021: HR consultants and IT professionals.
During the COVID-19 pandemic, HR consultants have been busy. They have been involved in advising on/administering furlough schemes, redundancies, opening offices/premises, health and well-being issues and discrimination claims.
They have had to consider whether employees have a factor which puts them at risk in respect of COVID-19 (age, ethnicity, caring responsibilities etc.) This will includes considering whether any of these factors fall within the definition of protected characteristics within the Equality Act 2010. If so, HR consultants may be exposed to claims for aggravated damages in relation to any discrimination claims.
HR consultants have duties in relation to the employees' set up at work – whether at home or in the office. Employees returning to the workplace will need to have COVID-19 appropriate safeguards and protections in place. Those working at home will need to receive "reasonable adjustments", including that they are being looked after in relation to health and wellbeing and that that have an appropriate home working set up.
HR consultants could, therefore, face claims from employers and/or directly from employees should problems arise in relation to any of the above issues.
IT professionals have also been affected by the pandemic. The risks they face relate to IT infrastructure becoming even more business-critical during 2020. An effective IT infrastructure has been critical for a huge number of businesses to function effectively. This has led to increased demand for IT services. IT professionals have therefore become more in demand. However, with that comes a risk that where there are problems with delays for production of IT systems (particularly with time of the essence provisions in contracts), we could see less testing of systems before being put in place and, potentially, an increase in claims.
Download our full Annual Insurance Review 2021 for more insights.