Miscellaneous professional indemnity

In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for miscellaneous professional indemnity.

Key developments in 2021 

The effects of COVID-19, multiple lockdowns and widespread working from home have, undoubtedly, brought with them a raft of new challenges – which also means new and increased risks for all manner of professions. HR and IT consultants were kept very busy throughout 2021 as companies tried to adapt to new ways of working remotely, in circumstances many hadn't dealt with before. It is fair to say that, back in early 2020, COVID-19 was anticipated to be relatively short-lived, with a need for short-term "quick fixes" to enable people to do their jobs. However, 18 months later, it became clear that COVID-19 had no intention of moving on and more substantial changes were required, which caused some companies to revisit, or even restructure, their entire way of working.

Aside from employment considerations (including furlough schemes and redundancies), companies had to consider the physical aspects of lockdown (such as the provision of suitable equipment and ensuring that office space had adequate safeguards in place). Health and wellbeing was a prominent theme throughout 2021 and there was an increased awareness of mental health and an expectation on employers to provide adequate support and make "reasonable adjustments" for employees working from home.

With far less people in the office, IT assistance was undoubtedly sought by other means (such as email or phone), thereby putting companies' IT infrastructure under additional strain. Moreover, given the greater number of people working remotely, IT infrastructure became all the more business-critical and carried a greater degree of risk of failure or inefficiency - and, in turn, an increased risk of claims. 

It is difficult to ascertain, with any certainty, the causative impact of the above issues on the number of claims actually made against HR and IT consultants in 2021, owing to the absence of data and statistics; such is the nature of miscellaneous PI. However, it is highly likely that both professions will have seen (or soon will) an increased number of claims as a result of these issues. 

What to look out for in 2022 

The new Omicron variant and the reintroduction of preventative measures – namely that everybody continues to work from home - is likely to mean that HR and IT professionals continue to face a greater risk of claims in 2022. The increased demand on IT services during 2020 and 2021 has led to a rise in systemic software vulnerabilities (i.e. with third party software, such as Microsoft Exchange). Hackers are becoming more sophisticated by the day and if they are able to exploit these vulnerabilities, the affected businesses are likely to look to their IT service providers to explain why the vulnerability wasn't patched. This could lead to tech disputes.

We anticipate that estate agents are also likely to face additional claims resulting from the longevity of the pandemic and the ongoing need to provide alternative solutions in order to generate business. For example, many firms have increased the marketing of online "virtual" viewings (which surged in popularity during the pandemic). Technology plays a key role here and, aside from the potential glitches caused by software and technology (which may also lead to claims against any IT consultants who marketed, installed or managed those products), it is easy to see how properties may not be accurately represented on a mobile phone or computer screen. A whole host of problems – including smells, noise and damp – are not always visible on video, which leads to an increased risk of claims.

Virtual viewings also inevitably limit the contact between estate agent and client and even viewings in person may create a distance, thanks to social distancing measures. This increases the margin for error, particularly where clients are asked to process tenancy paperwork virtually as well as viewing the property online.

Virtual viewings are just one way that firms have adapted to working remotely. As COVID continues to dictate how firms do business, new and ongoing opportunities for innovative thinking will emerge. One area that is likely to see change is underwriting, particularly where more experienced professionals retire and are replaced by a younger cohort, armed with a different appreciation and experience of technology and a desire to create something new. We anticipate that this will lead to revised policy terms and conditions and, in some cases, tailor-made policies for some insureds.

Written by Stacey Davies.

Download our full Annual Insurance Review 2022 for more insights.