Professional services – risks and insurance issues from COVID-19
Generally professional services firms will have in place quality control mechanisms which will, in the ordinary course, reduce exposure to claims brought under these policies. Some of these mechanisms will include peer-review, document management protocol, ongoing workplace training and professional development.
Whilst working from home plans can cater for these usual practices, significant disruption to traditional operations may be impacted by COVID-19.
The professional indemnity insurance market has hardened[1]. It will be a particularly difficult renewal for, in particular, financial services licensees, investment advisors, accountants, lawyers, valuers, health professionals and building/construction professionals.
We make the following observations:
- Construction professionals including architects, engineers, project managers, surveyor, certifiers and building inspectors may be exposed to liability in failing to discharge contractual obligations where their services require physical attendance on site. Guidance has been provided from the relevant industry bodies[2]. We have also been privy to issues causing delay because of failure of home computer capacity to run computer aided design IT programs. Contracts must be checked to ensure losses as a result of failure to exercise duties cause delay, particularly when we have been made aware that some insurers are excluding consequential loss on professional indemnity renewals.
- Law firms are faced with changing procedures to daily work. Whilst most practices are adapting to technological change, the profession has been slow to do so. Given the voluminous documents that pass in litigation and complex transactions, extra care must be taken to ensure document repositories are kept up to date and documents suites are complete.
Other concerns include increasing bad debts, lack of peer review, changes to “court procedure”, issues with online hearings and the veracity of evidence given in such fora, disruption to staff working on files due to lay-offs and certification of documentation.
The various State and Territory Law Societies have published resources and precedents to assist practices respond to COVID-19. These should be consulted.[3] - Accounting firms will be faced with navigating significant changes to tax and subsidy systems as well as navigating business through the issues presented by COVID-19 and the impact to their financial performance, and potential insolvency. Contemporaneous file notes will be imperative for accountants in light of the ever changing amendments to tax and government relief being offered.
We consider that there will be an uplift in requests for accountants to assist in the preparation of applications for credit.
The Institute of Chartered Accountants has published resources and precedents to assist practices respond to COVID-19. These should be consulted.
- Property valuers are concerned with risk of health to those in the profession having regard to inspection of properties. Note that the Australian Property Institute has issued protocols on 29 March 2020 “Valuation Protocol – Guidelines for API Declared Time of Crisis and/or State of Emergency Impacting Physical Inspections of Real Property”.
- As regards pharmacies, medical centres, health and aged care providers all are faced with the risk of exposure to claims brought by patients, customers for compensation if they contract COVID-19. The professional indemnity policy is likely to respond to a claim brought against health practitioners for failure to diagnose.
Companies employing experts in the medical field may also be at risk. Private medical facility employers with inadequate procedures present risk. Healthcare practitioners should consult with their professional body and have regard to Government advice.
By way of example, and specific to pharmacists, they should continue to review The Pharmacy Guild of Australia’s updates regarding business and processes, workplace relations, and COVID-19 employer obligations. - Technology professionals may be susceptible to claims for failure of products and services as reliance of business becomes critical on technology in the current environment. Technology professionals are normally insured for their products and services under an information technology policy (“IT Liability”). That policy combines professional indemnity and public/products liability. Technology professionals should ensure that they review their contracts, particularly any consequential loss provisions.
[1] There are less insurers (withdrawal in particular of Lloyd’s of London), less competition, reduced appetite for risk, cover reduced, capacity reduced, rates and excess have increased.
[2] https://www.consultaustralia.com.au/covid-19response; https://www.engineersaustralia.org.au/COVID-19/Update; https://aca.org.au/tag/COVID-19
[3] NSW Law Society: https://www.lawsociety.com.au/news-and-publications/news-media-releases/impact-covid-19-legal-profession; QLD Law Society: https://www.qls.com.au/For_the_profession/COVID-19_LEGAL_PROFESSION_RESOURCES; Law Institute of Victoria: https://www.liv.asn.au/Professional-Practice/Supporting-You/COVID-19-Hub
