Clients with business interruption (BI) insurance can now refer to a policy checker provided by the Financial Conduct Authority (FCA).
Based on the outcome of the FCA test case, the online tool is a general guide aimed at assisting policyholders to see if their coronavirus-related BI losses are likely covered.
You can access the policy checker here. You will need to have your insurance policy schedule on hand.
According to the FCA website:
“The policy checker helps you to check whether the wording in your policy is the same as, or very similar to, the 21 policies in the ‘representative sample’ considered by the courts in the FCA’s test case.
“If so, the High Court and the Supreme Court rulings provide important guidance on the way your policy should be interpreted and on the strength of your claim, based wording of your policy.”
Use professional valuation services to help you decide on your sums insured – useful information can be provided by your broker or insurer, or via http://abi.bcis.co.uk or www.rics.org/bcis. Regular valuations will help ensure the sums insured are correctly assessed.
Getting the numbers right when you buy your insurance policy will help avoid any inadequate sums insured becoming even less suitable year-on-year.
Sums insured for buildings should be based on the cost of rebuilding not the market value – particular features of your premises might affect the cost of reconstruction.
For business interruption consider buying declaration-linked insurance because it provides an uplift of 33%, providing that the sum insured and period of indemnity are both correct initially and declarations are made when requested by insurers.
When looking at business interruption insurance remember that accountancy and insurance policy definitions of annual gross profit are different. Make sure your assessment of gross profit matches the one in your policy.
When thinking about an indemnity period for business interruption covers, remember that 24 months is likely to be the minimum period needed for a business to fully recover its trading level and to rebuild its customer base.
Checking documentation is always a good idea; many insurers will make every effort to draw your attention to the important conditions of your policy but it is always important to check to make sure there are no errors.
Disaster recovery or business continuity plans may help you recover after a loss.
If you buy a simple online package policy check that the liability limits of indemnity, business interruption indemnity periods and other standard policy limits are sufficient.
Liability policies are complex. Make sure that you have considered the risk of claims against you and check whether you have taken on any liabilities under your terms of business contracts.
New risks sometimes emerge. Consider how the risks to your business change, including areas such as cyber risk or data protection.
The costs of claims preparation, such as the costs of instructing an expert or an accountant to help with the claim are not usually included in your insurance cover and may be costly; discuss with your broker whether you need to buy additional insurance to cover this.
As your broker, we can provide advice on how to assess sums insured and can help you to buy insurance cover that meets your needs. Download the guide for more information on avoiding underinsurance or contact us today with any questions.
On 15 January, the Supreme Court handed down its judgment on the FCA’s business interruption test case.
It remains the case that most SME business interruption (BI) policies are focused on property damage and only have basic cover for BI as a consequence of property damage, so are unlikely to pay out in relation to the COVID-19 pandemic and its effects.
Some policies contain ‘non-damage’ related extensions of cover for business interruption, such as infectious or notifiable diseases (disease clauses) and denial of access or public authority closure or restriction clauses (denial of access clauses). The FCA argued that some policy wordings with disease or denial of access clauses do provide cover.
Following the judgment, the FCA advised “The judgment says that most, but not all, of the disease clauses in the sample provide cover. It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including for example whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.”
Clients who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim. The Association of British Insurers has stated that “All valid claims will be settled as soon as possible and in many cases, the process of settling claims has begun.”
It is important to note that the Supreme Court judgment does not mean cover will apply in every circumstance or under every policy.
Since 15 January, many insurers have posted policyholder updates in response to the Supreme Court judgment. We have indicated where an update has been provided since 15 January. This page was updated on 25 January and will be reviewed regularly, so do check back from time to time.
We are continuing work with insurers to get a resolution as quickly as possible. You can visit the FCA’s business interruption hub for more information here.
A post-Brexit trade deal could be sealed as talks between the UK government and European Union continue this week. Before the weekend, both parties said that ‘no-deal’ was the most likely outcome.
Whether or not a deal is agreed, you should ensure that your business is prepared for operating under new rules. Please review the information and guidance below on what arrangements you could face from January 2021 onwards.
Resources to help you prepare for a no-deal Brexit
Create an Action Plan: Answer a few questions for your personalised action list for you and your business from the GOV.UK website.
Importing Goods: If you import goods from the EU, you will need to change your processes from 1 January 2021. Find step by step instructions and prepare your plan now
Exporting Goods: The process for exporting goods to the EU will change from 1 January 2021. Find out what actions you need to take in order to start or continue exporting goods to the EU.
Travelling in Europe: Travel to the EU, Switzerland, Norway, Iceland or Liechtenstein will change from 1 January 2021. You might need an international driving permit (IDP) to drive in some countries. If you’re taking your own vehicle, you will also need a ‘green card’ and a GB sticker.
We are delighted to announce we have become the official insurance partner for Fleetwood Town FC – strengthening our relationship with the club and the BES group of companies.
Fleetwood Town’s Business Development Executive, Darren Spedding, said: “We’re thrilled to have Central Insurance on board with us as our Official Insurance Partner for the 2020/21 season.
“They are a well-known local business who have been providing insurance across the Fylde Coast for over 30 years, and I’m looking forward to us working together and building on our existing relationship.”
Drew Passmore, Managing Director of Central Insurance, said: “As a local business, which is locally owned, we are delighted to be partnering with Fleetwood Town for the upcoming season, bringing reciprocal business to the football club.
“As well as partnering with the Club, we’re also the insurance provider for the Chairman’s wider group of companies comprising BES Utilities, Card Saver, BES Metering Services and more.”
The Financial Conduct Authority (FCA), the UK’s financial conduct regulator, brought court proceedings in July 2020 to test how certain business interruption insurance policies respond to claims arising from COVID-19.
The judgment runs to over 150 pages and will take a little time for us to fully review, but the court has, broadly speaking, agreed that a number of policies do provide cover for business interruption losses as a result of COVID-19.
Whilst this will provide welcome news to many of our clients, both insurers and the FCA will now need time to review the judgment. If any of the parties to the case determine that there are aspects of the judgment they wish to appeal, they will seek permission to do so from the court. Should an appeal take place, the position on the cover available under a policy including any existing claims will remain unchanged by the judgment until that appeal process has concluded.
The FCA has said that every policyholder who has made a claim or complaint that is potentially affected by the judgment should receive an update from their insurer within 7 days.
Now that the judgment has been handed down, the parties must wait for a consequentials hearing to take place, at which time the Judges will make certain declarations in respect of their judgment and will likely also address the parties’ rights of appeal. The date of the consequentials hearing is expected to be fixed shortly with the High Court and is likely to take place in October. The court has already agreed to live-stream the hearing if it is heard remotely.
Due to the likelihood of an appeal from one or more insurers, the judgment is not a final determination – we will need to wait until conclusion of any appeal before any of this can be acted upon.
If you are waiting for an outcome on your claim, there are some things you can do now to prepare. Gather together the following evidence in support of your claim:
a summary of weekly or monthly turnover from 01 January 2019, which you should keep up to date until requested by us;
annual accounts for the last two financial years, audited if available;
management accounts for the last two financial years;
management accounts for the current financial year to date, which you should keep up to date until requested by us; and
details of any business support grants received by the insured business, including any furlough payments.
We will keep you updated with relevant information as it becomes available. In the meantime, if you have any questions, please do not hesitate to contact us.
COVID-19 has caused many businesses to shut down or transition their employees to work from home, disrupting daily work life for many. As stay-at-home regulations are scaled back and all businesses are allowed to resume as normal, your employees will be asked to come back to work. While they may not be coming back from an injury or leave, you need to have a plan in place for all employees to safely and successfully return to work.
Return to Work Considerations
Returning to work after the COVID-19 pandemic is likely to bring challenges to your organisation. Some of the most common challenges that you’ll need to be prepared for include the following:
Changing worker priorities
If your organisation asked its employees to work from home during the COVID-19 pandemic, employees may want to still enjoy work from home arrangements even after the office is reopened. Your organisation should be prepared for an increased demand in work from home requests, and you may need to expand your pre-COVID-19 policies to meet this demand. In addition, prospective employees may ask about this benefit when they’re searching for a job within your company.
Updating the office layout
Due to social distancing protocols, your organisation may need to reconfigure the office’s layout. Per the guidelines, employee workstations should be 2 metres apart to help prevent the spread of COVID-19.
Adapting to changing rules and regulations
Due to the nature of the COVID-19 pandemic, rules and regulations are constantly changing. You should be prepared to change your business practices if needed to maintain critical operations. This could involve identifying alternative suppliers, prioritising existing customers or suspending portions of your operations.
Managing reputational effects
Given the scope of the COVID-19 pandemic and how much is still currently unknown about the situation, people may have strong opinions about your decision to reopen your business. You’ll need to be prepared for the reputational effects of reopening your business. By taking the steps to keep your employees and customers safe and healthy, you can manage reputational effects of opening after the pandemic.
Remember, reopening your business after the COVID-19 pandemic isn’t as simple as opening your doors. You’ll need to carefully evaluate each step of your reopening and gradually ask employees to return to work.
The government, in consultation with industry, has produced guidance to help ensure workplaces are as safe as possible.
These 8 guides cover a range of different types of work. Many businesses operate more than one type of workplace, such as an office, factory and fleet of vehicles. You may need to use more than one of these guides as you think through what you need to do to keep people safe.
Shops and branches Guidance for people who work in or run shops, branches, stores or similar environments.
Vehicles Guidance for people who work in or from vehicles, including couriers, mobile workers, lorry drivers, on-site transit and work vehicles, field forces and similar.
Return to work plan
While you may need to tailor your organisation’s COVID-19 return to work plan to employees’ specific needs (e.g., childcare arrangements, care giving responsibilities and health issues), having a generalised plan in place can help you safely reopen your business.
This short video offers simple steps to help your organisation create a return to work action plan in the midst of the COVID-19 pandemic.
Your COVID-19 return to work plan should include the following:
Anticipated return to work date
With the uncertainty that COVID-19 has brought, it’s important to give clear information and dates when employees are to return to work whenever possible. Be sure to be flexible with your dates, though, as national orders are frequently updated.
Disinfecting and cleaning measures
Because COVID-19 can remain on surfaces long after they’ve been touched, it’s important that your business frequently cleans and disinfects the facility. Some best practices include:
Cleaning and disinfecting all frequently touched surfaces in the workplace, such as workstations, keyboards, phones, handrails and doorknobs.
Discouraging workers from using other workers’ phones, desks, offices, or other tools and equipment, when possible. If necessary, clean and disinfect them before and after use.
Providing disposable wipes so that commonly used surfaces can be wiped down by employees before each use.
Social distancing protocol
Social distancing is the practice of deliberately increasing the physical space between people to avoid spreading illness. In terms of COVID-19, social distancing best practices for businesses can include:
Avoiding gatherings of 10 or more people
Instructing workers to maintain at least 2 metres of distance from other people
Hosting meetings virtually when possible
Limiting the number of people at the worksite to essential personnel only
Discouraging people from shaking hands
Employee screening procedures
To keep employees safe, consider conducting screening procedures to identify potentially ill employees before they enter the office. The Information Commissioner’s Office (ICO) permits employers to measure employees’ body temperatures before allowing them to enter the worksite. Any employee screening should be implemented on a non-discriminatory basis, and all information gleaned should be treated as confidential medical information under the Equality Act 2010. The ICO has advised employers that they are permitted to inform your staff that a co-worker may have contracted COVID-19, but it is unlikely that you will be obligated to reveal the employee’s identity. Employers should not divulge more information than necessary about the situation. In addition to measuring body temperature before entering the workplace, employers may also be able to have a private medical provider administer a swab test to check employees for COVID-19 before allowing them to return to work. The ICO noted that it is unlikely that organisations will be asked to share health details for individual employees with authorities, but if deemed necessary, data protection laws will not apply, and employers will be obligated to comply.
Employee safety training
Your return to work plan should include detailed safety training guidance to ensure that all employees understand how they can prevent the spread of COVID-19. Your plan should discuss the following safety training topics:
Respiratory etiquette and hand hygiene—Businesses should encourage good hygiene to prevent the spread of COVID-19. This can involve:
Providing tissues and no-touch disposal receptacles
Providing soap and water in the workplace
Placing hand sanitisers in multiple locations to encourage hand hygiene
Reminding employees to not touch their eyes, nose or mouth
Personal protective equipment (PPE)—PPE is equipment worn by individuals to reduce exposure to a hazard, in this case, COVID-19. Businesses should focus on training workers on proper PPE best practices. Employees should understand how to properly put on, take off and care for PPE. Training material should be easy to understand and must be available in the appropriate language and literacy level for all workers.
Staying home when sick—Encourage employees to err on the side of caution if they’re not feeling well and stay home when they’re sick or are exhibiting common symptoms of COVID-19 (e.g., fever, cough or shortness of breath).
Mental health considerations
The COVID-19 pandemic has increased stress levels of employees across the country. It’s important that your return to work plan includes guidance for managing employee mental health concerns when employees return to work.
Process for individualised requests
Employees will be returning to work and facing different situations at home or with their health. Your return to work plan should include information about how employees can go about making individualised requests for changes to a return to work plan. Some may have underlying health conditions that put them at greater risk of severe illness with COVID-19, meaning they may not be able to fully return to work. Others may be facing unique childcare arrangements due to schools and day cares being closed. Be flexible and compassionate in your response to individualised requests.
Claims culture and worker safety are hitting the headlines with some parts of the UK starting to return to work. Companies House data in February and March shows the emergence of 45 newly incorporated limited companies that contain the words ‘corona’ or ‘COVID’, with many focusing on compensation.
As a result of COVID-19, business owners have had to be increasingly agile to ensure the continued survival of their businesses, but every decision that you make has the potential to be scrutinised by clients, employees and shareholders.
Employee welfare and perceived dangers
As a director, you will keep the health and safety of your employees at the heart of your decision making. Understanding risks that are “serious and imminent” would previously have been well-established and documented procedures that would already be in place to reduce potential harm to employee welfare. The emergence of COVID-19, however, requires specific risk management consideration in respect of
The extent to which employees can be expected to bear an increased degree of risk at work because of the pandemic and employers should have to go to protect them from the new danger of COVID-19 is considered in this legal guidance from Gus Baker.
It is important to remember It is the employee’s perception of danger that matters, not the employer’s.
Alteration to contracts of employment
In an effort to ensure business continuity there may be a need to make changes to your employees’ day-to-day work. This could include.
Reducing salaries (furlough or otherwise)
Change of work location/hours
Change of job role/duties
Before making any decisions, careful consideration is required and the ACAS website will provide invaluable support.
Shareholder and investor relations
The directors and senior management, collectively and individually, could face increased scrutiny in respect of how the business is managed, such as:
The government amended the insolvency act to allow businesses to trade insolvently. This is unchartered territory and decision making could be challenged.
Shareholders may allege negligence in respect of business continuity planning
Investors may argue that disclosures about the impact of the coronavirus on the company were misleading or inadequate
Management Liability (MLP) Insurance
Management Liability is designed to protect directors and senior managers in the event of allegations by employees, shareholders, third parties, and others. It can be extremely costly to defend against allegations, which could put the financial stability of a small business or the personal assets of individual directors at risk.
A Management Liability Insurance package can include cover for the following areas;
Directors and Officers Liability. Personal liability for legal costs and awards in defending any civil, criminal, regulatory claim or investigation against directors, officers and senior managers.
and companies in the form of;
Employment Practices Liability. Cover for claims from current and former employees alleging a breach of employment law.
Corporate Legal Liability. Cover a company’s liability for legal costs and awards in defending any civil, criminal, regulatory claim or investigation.
Claims can be made by suppliers, employees, shareholders, creditors and other stakeholders, so now, more than ever, it is important to have financial protection in place.
The Coronavirus pandemic has resulted in unprecedented workplace changes. While the UK is on lockdown, employers have had to make necessary adjustments to allow staff to work from home. Perhaps there will be a lasting shift towards home working – the AA predicts a permanent reduction in the demand for travel because people have learned during the crisis to use home-working technology.
But, home working carries a wide range of cyber-risks. Specifically, having your employees work from home can increase their vulnerability to cyber-attacks—which could be costly.
In fact, recent research from cyber-experts revealed that hackers across the globe have been taking advantage of remote workers in the midst of the COVID-19 pandemic by utilising a variety of phishing
These scams, which typically appear as fraudulent emails from trusted organisations such as Public Health England or the World Health Organisation, trick victims into clicking on malicious links—thus allowing hackers to infiltrate their devices and access sensitive data. These attacks have already resulted in losses totalling nearly £1 million, and they aren’t stopping anytime soon. Now more than ever, it’s vital to ensure your remote working arrangements are secure. Review the guidance below for best practices on how to keep remote employees (and your business) protected from cyber-attacks over the next few months.
Prepare Your Technology
First, it’s important to assess your workplace technology to ensure it possesses proper cyber-security features to combat remote working risks. At a glance, your organisation’s software should have these key characteristics:
A virtual private network (VPN)—Having a VPN allows your employees to utilise a private, protected network connection. VPNs provide numerous cyber-security features, such as hiding users’ IP addresses, encrypting data transfers and masking users’ locations. If you don’t already have a VPN, you are missing a crucial step in implementing a secure remote working environment. If you do already possess a VPN, make sure it is fully patched. Keep in mind that additional licences, capacity or bandwidth may be required if your organisation normally has a limited number of remote employees.More VPN guidance.
Restricted access controls—Be sure that all remote work technology possesses the same account access restrictions as that of your on-site software. Only allow competent, qualified and trusted staff to have access to sensitive company data.
Encryption capabilities—Apart from having a VPN, make sure that your remote work technology has additional encryption capabilities to keep sensitive data protected in the event that an employee’s device becomes lost, stolen or compromised.
Antivirus and malware protection—Lastly, require all remote work technology to be bolstered with the latest antivirus, malware and firewall protection software.
Some businesses will be using Remote desktop protocol (RDP) instead of VPN for remote working. This has been reported to pose some cyber risks –see here for more information.
Prepare Your Employees
After you have prepared your technology, it’s time to provide employees with robust resources and training to ensure a cyber-secure remote working programme. This is especially important for employees who haven’t worked from home in the past or lack advanced digital skills. Consider providing staff training on the following topics:
Conducting key operations—Be sure to educate your staff on how to conduct common remote working practices, such as video teleconferencing and document sharing. Create written instructions for employees who need additional support.
Taking care of technology—Encourage employees to log out of their devices when they are finished working for the day and store all workplace technology in a secure, protected location.
Creating strong passwords—Require all employees to create strong passwords for their company accounts and devices. These passwords should be an appropriate length (at least 10 characters), difficult to guess and contain a variety of special characters (eg capital letters and punctuation marks). Employees should update their passwords on a routine basis.
Using removable media—Using removable media (eg USB drives) can carry a variety of cyber-security risks, seeing as they often contain sensitive information and are easy to misplace. With this in mind, cyber-experts recommend prohibiting your employees from using removable media for work purposes. However, if you must use removable media, be sure to educate staff on safe use and storage practices. Additional removable media guidance.
Utilising personal devices—If you allow employees to utilise personal devices for work purposes, make sure you implement and enforce a bring your own device policy. Only allow competent, qualified and trusted employees to use their own devices.
Conducting regular updates—Be sure employees know how to conduct regular software updates on all workplace technology. If you allow staff to use personal devices for work purposes, ensure they know how to conduct software updates on this technology as well.
Detecting signs of phishing—Educate your employees on the following common signs of phishing scams:
The email requests the recipient to share sensitive personal information or account credentials.
The email claims to be from a trusted contact but isn’t from the correct email address.
The email contains glaring errors, such as typos, poor grammar, false information or false imagery (eg an incorrect company logo).
The email does not address the recipient by name or has been sent to a long list of other recipients.
The email is from an unknown sender or a contact that your organisation rarely communicates with.
The email contains links that direct you to the wrong website or asks you to log in to an account.
The email claims to be urgent, comes across as demanding or is threatening.
Make sure that all employees know how to report any cyber-concerns that they might experience while working from home. Staff should report these problems to their direct supervisors and your IT department, if needed.
If an employee needs to report a serious concern, such as a cyber-attack, they should also know how to contactAction Fraud.
Have a Cyber-incident Response Plan
In addition to preparing your technology and your staff, make sure your organisation has a cyber-incident response plan in place to help limit the potential consequences in the event of a cyber-attack. Educate all employees on this plan and test it regularly for effectiveness. Make updates to your plan as necessary.
Cyber-attack trends continue to evolve in these uncertain times, and it can lead to lost revenue, damaged reputation and regulatory fines. Be sure to regularly review and update your policy to avoid the ruinous ramifications of a cyber-attack.
If you don’t have cover and you use computers or the internet at work, hold customer/supplier/employee data, carry out online transactions, or even just uses social media, you should be thinking about it.
It’s there to protect your business against things like fraud, data theft and social engineering, where criminals attempt to fool you into parting with money, information or both. It also covers data breaches where sensitive information is accidentally shared.
If you have any questions on cyber insurance or the article in general, please don’t hesitate tocontact us today
The information and materials above are for general information purposes only, are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.
4 Million British workers have been furloughed during the COVID-19 crisis, with the government expected to pay 80% of the salaries of as much as 6% of the entire population. Once an employee is furloughed, they are unable to work in a capacity which either makes a profit or provides a service to the employer.
What’s the impact on Employers Liability?
The Employers’ Liability Insurance Act requires that all businesses with employees have Employers’ Liability insurance in force. An individual who is furloughed retains their employment rights and normal employment law will apply for all employees. So the requirement for Employers’ Liability insurance remains as does the exposure, albeit it’s reduced to non-manual and mental health in nature.
The impacted furloughed employees should be shown separately in wage roll estimates and declarations. It would be prudent to highlight the wage roll as well as the period of time when your employees were furloughed.
Guidance in respect of the government’s job retention scheme can be found here.
Supporting your furloughed employees
Some people may welcome being furloughed as it may help them to look after children or provide care to vulnerable people. But other people may find the process more difficult.
Staff may be worried about whether they will have a job to come back to and/or they may feel that they are not valued enough. Employers have a duty to take reasonable care for the health and safety of their staff, and this includes taking reasonable care to prevent issues surrounding mental health from occurring.
Mental Health UK has produced information on supporting employees on furlough, which outlines some of the ways you can support furloughed staff with their wellbeing.
The majority of businesses have struggled to find the time to support their workforce with training and development over the past few years and now is the perfect opportunity to remedy that.
Helping your employees to utilise their spare time with training and development has numerous benefits both for the employee and your business.
It keeps your staff engaged and thinking about the role they have to play with their company
Upskills your most important business resource
Encourages the generation of blue-sky thinking and innovation
Increases income generation and profitability
The government has launched a new online platform offering free training courses that it hopes will allow citizens to use time spent at home to acquire new skills. The Skills Toolkit is a collection of training resources to help people use the lockdown to acquire jobs skills for when more businesses reopen:
The Open University is providing courses on basic maths and how to write computer code
Futurelearn is offering courses in digital skills and producing online content
Google has a course in digital marketing
Digital-inclusion charity the Good Things Foundation has resources to help people get started online
OpenLearn 1,000 free online learning resources delivered by Open University
Coursera Courses, certificates and online degrees in subjects like computer science, data science, IT, maths, social sciences and languages.
edX Explore courses in a wide variety of topics including computer science, languages, data analysis and statistics, business and humanities.