As the country heads into a 21-day Government enforced lockdown, many professionals are concerned about the impact of the imminent loss of income on their business and what exposures they may face as a consequence of COVID-19.
With schools closed and full-time employees expected to work at home as far as possible, as well as parent and teach at the same time, pressure has taken on a whole new form and with it comes the potential for mistakes and consequences for professionals.
While nobody can predict the full impact that COVID-19 will have on our economy, it will undoubtedly influence and contribute towards an already tough market.
The built environment is already under tremendous pressure. Insurers have noted many reported claims against professionals stemming from failure to supervise. In the current situation, if a project team is quarantined, or if materials are not delivered, it could attract increased costs, and the threat of penalties if the project is not completed on time. Should an engineer fail to attend site or fail to provide adequate supervision due to being quarantined, it may result in failures or injuries as a direct result. Loss of income following a decline in new business increased prices, cost overruns, shortage of supplies, non-payment following financial constraints, canceled projects or projects stalled which were in the pipeline, are all inevitable, leaving a dark cloud over an already struggling industry.
Without insurance, very little progress takes place. No investments can be made, no loans can be acquired. At the heart of virtually every financial or economic decision, is an insurance policy of sorts.
Intermediaries play an integral part of these transactions. Since COVID-19 is unchartered water, the likelihood of opportunistic claims against insurance brokers is possible as insurers potentially reject such claims. Days into the declared State of Disaster, some insurers have already included COVID-19 exclusions on their policies, while others are looking at new insurance products for clients who are trying to identify with an unknown future.
Where insurance premiums are based on the professionals’ performance, we can expect to see reduced revenue, however with insurers now responding to more potential claims, we may yet again be looking at a premium increase from Insurers further down the line. We may also find that professionals will buy down on insurance in an attempt to keep their heads above water, which could leave them exposed in certain instances. We are likely to see changes to policy terms and conditions and possibly extensions or exclusions to provide limited cover going forward.
Legal professionals will inevitably be called in to handle disputes between various parties affected by COVID-19. We foresee disputes arising between employers and employees in terms of leave, unfair dismissals, contractual obligations, no work-no pay scenarios and the drilling down into how force majeure affects business, employees and individuals. The legal profession will be called upon to review and understand contractual obligations, and the impact of the COVID-19 virus as a force majeure outside of anyone’s control. We have already seen queries relating to which jurisdiction will be used and whether COVID-19 constitutes an “occurrence”.
Attorneys themselves are also not immune to potential claims against them. To an attorney, time is money, and with courts being closed and many meetings cancelled, projected income may also have a very different look. In addition, situations may arise where an attorney is quarantined and does not have measures in place for his matters to be dealt with, or whilst under quarantine the attorney is unable to appear in court on behalf of his client before a matter prescribes.
Consultants are being called upon now more than ever to advise the best way forward as their clients are facing disastrous times filled with panic. What if this advice proves wrong, or is challenged? From a labour perspective, a consultant may advise a client to send their staff home – only to be faced with claims for non-payment or unlawful salary deductions.
The healthcare environment faces significant challenges – why were flu-like symptoms when presented to a doctor not tested for COVID-19 at the time, for example? Although extreme, there is still a possibility that a doctor, who may have symptoms, fails to check or quarantine himself before a routine procedure and continues to operate on a patient – infecting the patient who then suffers further illness or even death. Consider the doctor who has scheduled a critical operation on a patient and is now unable to attend to it due to being quarantined or due to self-isolation, and he does not put alternate plans in place and the patient’s condition deteriorates. If situations like this arose whereby there was loss of life that might have been prevented – legal action will inevitably be brought against the medical practitioner.
COVID-19 brings with it many unknowns and much is currently being done by our medical practitioners to prevent panic and instill a sense of calm. There will inevitably be legal consequences that will accompany this virus. We may not see the impact immediately, as with most claims of this nature, it can take years to finalise.
As a preventative measure, many practitioners are now conducting online therapy and diagnosis, at the request of their patients. This lack of human interaction may be unsettling to the practitioner, however, failure to comply with the patients request, might see the medical practitioner being reported to their councils or professional bodies.
Risks of Error are Likely to Increase
The effects of isolation, social distancing, and travel bans, contributing towards a reduced and possibly less reliable workforce, could potentially increase the risks of error on the part of professionals.
Our pre-COVID-19 economic status was already volatile. Now we face unprecedented pressures of how we will survive given the potential job losses, non-payment of services rendered, a national lockdown, the threat of insolvency, and the additional pressure of increasing costs of working and keeping employees safe – at any cost.
All businesses will suffer some form of financial loss, many professionals may suffer mental and physical health challenges as anxiety increases among employees. With the absence of these employees due to sick leave, for entities providing professional services, the writing is on the wall. Chances of errors missed deadlines, colleagues working on unfamiliar content, all the while being under pressure, could possibly result in some form of negligence claim against the professional.
Nothing about the weeks ahead is ‘business as usual’ – we stand on the precipice of fundamental changes to the world of work we once knew, and a future that is both daunting and exciting at the same time. As professionals, our task is not to avoid the inherent risks that come with uncertainty but to prepare and mitigate as far as possible those risks that would limit us, while navigating the ones that open the doors to opportunity and growth.