COVID-19 Insurance Update: 17 April 2020

With Foreign Secretary Dominic Raab MP having confirmed that the UK’s lockdown will be extended for “at least” the next three weeks, we provide you with our latest thinking into the insurance impacts arising from the ongoing crisis.

Alongside the confirmation of the lockdown extension, Christopher Woolard, Interim Chief Executive at the Financial Conduct Authority and Sam Woods, Deputy Governor of the Bank of England, gave evidence to the Treasury Select Committee via Skype on Wednesday. Fair treatment of customers was clearly central to the discussion, and the Committee was particularly interested in how the insurance market will evolve given the current crisis and whether there would be any demand for pandemic insurance; a discussion that is likely to continue in the Lloyd’s market.

The Committee session was complimented by Woolard’s Dear CEO letter of 15 April, which focused specifically on conduct in relation to business interruption insurance. The regulator has also set up a new small business unit, which aims to ensure regulated firms are supported through the challenges posed by the crisis.

In this edition, we continue to consider the impact on the life sciences industry. Recognising that the regulatory landscape for stakeholders in the life sciences industry is changing rapidly, we consider the implications of reported shortages (or anticipated shortages) of medicines used to treat patients and focus on the EU response to supply chain disruption, vaccine R&D and antibody testing kits.

Following the collapse of Carluccio’s into administration, we comment on the court decision made this week, which considered the application of the government’s Coronavirus Job Retention scheme. The judgment provides practical guidance and detailed clarity on the circumstances in which the furlough scheme can potentially apply in relation to employees of a company in administration. It will be interesting to see if the government’s guidance on the furlough scheme will be updated in light of the decision.

In the casualty space, we offer some updated guidance about likely employers’ liability claims that may stem from the coronavirus and highlight the key elements of such a claim, including employers duties, risk assessments and causation.

And we consider the psychological impact of COVID-19 health risks in personal injury claimants already dealing with the physical or mental consequences of an accident, and consider whether compensators might be exposed to additional claims inflation.

Looking outside of the UK, we explore the new regulations and procedural requirements for medical practitioners in Hong Kong. We examine the various control measures for infectious diseases in place, and what health professionals must be alive to; from wearing protective equipment to disclosure of disease information.

Contemplating when the UK may ease the lockdown, Mr Raab has said that the UK is carefully following examples in other countries, but “ultimately” the UK Government will follow its experts' advice based on conditions that are present in the UK.

Elsewhere, exit strategies are beginning to emerge. In the US, President Donald Trump has laid out new guidelines for states to emerge from a shutdown in a staggered, three-stage approach meant to revive the economy even as the country continues to fight the pandemic. The plan suggests that states should record a 14-day “downward trajectory” in cases before starting the process.

Denmark will also allow some small businesses like hairdressers, beauty salons and driving schools to open on 20 April. This follows the decision on Wednesday, to allow some nurseries and primary schools to reopen after infection rates steadied. And in Italy, plans are being put into place to use a smartphone app, developed by a tech start-up, to track people who test positive for COVID-19 as part of efforts to lift its nationwide lockdown.

Overall, we anticipate that the UK will continue to closely watch the actions of other countries, and that we all still have a period of ongoing review before the immediate impacts of the crisis begin to soften.

Links to all articles included in this update:

• COVID-19 and the life sciences industry: update
• Carluccio’s – application of COVID-19 furlough scheme to company in administration
• Guidance: COVID-19 and employers’ liability claims
• Psychiatric inflation factors in the UK: COVID-19
• COVID-19: new regulations and the procedural requirements for medical practitioners in Hong Kong