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• 29.09.2020 02:30 pm
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The global impact of COVID-19 has been nothing short of immense. Of course, this has been felt in a very personal sense, with over 900,000 deaths attributed to COVID-19 so far. The business world has also been hit hard in many countries. From aviation to travel and retail, many industries have faced an uphill battle to keep going during the pandemic. With lockdowns around the globe gradually easing, many businesses are now struggling to return to normal.

Another issue that seems more businesses will be affected by is an expected rise in professional liability claims due to COVID-19. This could well be a significant burden for companies at a time when they are already struggling. But why is COVID-19 expected to make this kind of impact on claims for professional liability?

A surge in professional liability claims expected

A look through the history books seems to confirm that a surge in professional liability claims could be around the corner. Such a trend followed the last big economic downturn in 2008, and this would suggest something similar will happen due to the current pandemic. But why is this?

Any major event which has a negative impact on people will affect their finances and careers. That can already be seen in the current COVID-19 pandemic by the number of people being made redundant as firms look to cut costs. Those same people will be looking for ways to raise money to survive, with a claim of professional negligence against a business often being a way to go about it. This could see businesses like nail technicians claimed against for not cleaning equipment properly between each client and allegedly passing COVID-19 onto someone.

The current pandemic is also likely to see more professional negligence claims against organizations by other businesses to recover losses. FinTech firms may see claims made against them for software failures, which clients say put them out of business, on top of dealing with COVID-19. Or a company may seek to pursue a professional liability claim against another if they allege poor advice was given in how to deal with the pandemic financially.

What impact will rising claims have on business?

From FinTech companies to pretty much every other industry around, increased professional liability claims will have a considerable effect. If the business is found to be culpable and does not have the right protection in place to help, extensive damages could be paid out to the claimant. With the serious nature of COVID-19, any claims upheld could be very costly. For many businesses, this could well be the final nail in the coffin after many months of not generating the usual level of income.

How can your business avoid this?

The fact is that all businesses make genuine mistakes now and then, from financial advice that does not pan out as expected, to a FinTech firm whose software miscalculates something due to bad code. COVID-19 has also seen industries like banking taking steps to move forward in lockdown, which has needed new products to be built and delivered quickly. This, again, could see the creators of new systems held professionally liable if they fail or lose client data. The key is to prevent your organization from being hit with high, potentially fatal costs should a claim be made against you.

The best way to go about this is by taking out professional liability insurance. This type of insurance is specially designed to cover your company against any claims made for professional negligence or professional mistakes. It will also cover you against civil lawsuits. It is essential to know that this is different from general liability insurance, which mainly protects you against accidents carried out as you work. It is a good idea for all businesses to have both. In terms of the expected surge in professional liability claims post-COVID-19, it is certainly worth considering.

Professional liability claims expected to boom post COVID-19

Although there are no hard and fast figures around the rise in professional liability claims due to COVID-19, many business experts predict an increase. This seems to be based not only on the weight of history but also on the severe financial hardship the pandemic has caused. Whether it is a person looking for a payout to survive or businesses looking to claim against professional advice given, the number of claims in this area looks set to boom. As a result, many organizations are now arming themselves with the right kind of specialist insurance to survive.