Insurers have received a significantly lower-than-expected number of COVID-19 infection claims, most of them weighted towards the social care and healthcare sectors. However, the results of an independent public inquiry tasked with examining the UK’s preparedness and response to the COVID-19 pandemic may lead to the notification of additional claims.
The COVID-19 pandemic has changed the world in which we live. Over the course of just over two years, there has been an estimated 22.4 million cases of the disease in the UK, resulting in 165,255 deaths in which COVID-19 was recorded on the death certificate. The human and economic toll has been vast and u. Uncertainties as to how the virus is passed from person to person and how transmission can be mitigated has led to broad and shifting guidance to employers and those that provide services to members of the public. It was against this backdrop that many commentators believed in 2020 and 2021 that the insurance industry would face thousands, if not tens or hundreds of thousands, of claims alleging COVID-19 infection as a result of an employer’s or a third party’s negligence.
Here we examine the current market experience of such claims, the challenges faced by claimants and how this area is likely to develop in the coming 12 -24 months. Alongside a review of our own data, we asked 15 major casualty insurers, law firms and adjusters what they have seen on the frontlines thus far and how they felt the landscape is likely to shift, particularly as we approach the beginning of the three-year limitation window in March 2023.
The Lay of the Land
Volumes
Whilst all respondents agreed that they had been expecting a significant influx of COVID-19 infection claims in 2021 and 2022 (in spite of the DWP confirming in spring 2021 that it had received notification of only 57 COVID-19 infection claims), it would be reasonable to conclude that this tidal wave has not materialised. None of our 15 respondents have received more than 500 COVID-19 infection claims and most have received less than 100.
Claim volumes are unsurprisingly weighted towards the social care and healthcare sectors, with one major carrier noting that over 50% of all claims they have received relate to alleged COVID-19 infections in care homes. Where claims are from other sectors, they tend to be driven by outbreaks of COVID-19 in factories or manufacturing environments, many of which largely remained open throughout the pandemic.
The reason for the disparity in numbers is due to the differing sectors that the respondents’ clients operate within. Furthermore, an abundance of caution from some policyholders appears to have increased volumes for insurers, with a major carrier noting that some insureds have taken ‘a very cautious approach, notifying every infection, generally in tandem with a RIDDOR notice’.
The respondents agree that around two thirds of claims received relate to an employer’s liability. This of course is unsurprising. Employees tend to be based on site together, meaning they are likely to be more cognisant of the picture of infection at their workplace. Furthermore, the standards of care owed by employers to employee are much better understood and documented, with many employers providing regular guidance on masks, hand washing, social distancing and other preventative procedures throughout the pandemic.
Whilst the remaining one third are public liability matters, which is perhaps higher than one would ordinarily expect for matters relating to disease, it is important to note that this is largely being driven by care home residents or those receiving social care services.
In terms of when new claim notifications were at their peak, Q4 of 2020 and Q1 of 2021 appear to have been particularly busy times, no doubt reflecting the high number of infections that took place across the first two national lockdowns announced on 23rd March 2020 and 31st October 2020.
Response
There was an indication from all respondents that they were invariably disputing COVID-19 infection claims pursued against their policyholders and clients. It does not appear, at least with our respondents, that any proceedings have yet been received or that any claim for COVID-19 has thus far been settled. Whilst a number of claims clearly remain open and ongoing, some insurer respondents suggested that they had closed a high percentage of notifications and claims as a result of a lack of contact from claimant legal representatives; one major insurer noting that ‘of the claims we’ve denied, we have not had a single response from a claimant lawyer’.
Where claims were being more vociferously pursued, the responses received confirm that these tend to relate to allegations of fatal injuries or long COVID symptoms. Such claims would be of a much higher value than a transient COVID-19 infection and would also not be subject to the fixed legal costs regime, no doubt a reason why claimant lawyers are more robust in their approach. One major insurer noted that interruptions to coroner’s court processes as a result of the pandemic had led to delays, with claimant solicitors unwilling to engage on questions of liability until the conclusion of the proceedings. Also, of relevance here, a major law firm pointed out that even where allegations of a fatal COVID-19 infection were made, the cause of death was often incredibly complex with numerous potential comorbidities to consider.
In terms of representation, the major carriers surveyed have noted that many of the claims are pursued on behalf of claimants by trade union affiliated solicitors. Whilst there appear to be three or four law firms driving claims notification, a review of the data suggests that no one firm has yet managed to consolidate the market.
Secondary Claims
Whilst the number of reported claims relating to COVID-19 infection are invariably low, one eminent law firm points out that for every infection claim they have received, they have seen over 100 ‘secondary COVID-19 claims’. These are claims related to the circumstances of the COVID-19 pandemic, but not attributable to infection.
Such claims may arise from a number of areas, but responses suggest that there are significant volumes of the following types of exposure:
Slips and trips as a result of COVID-19 measures at insured premises (barriers, cleaning & sanitising fluids, unusual or unsuitable exits etc.)
Assaults on employees
Stress
Defamation or discrimination claims resulting from instructions regarding the wearing of masks
Manual handling related incidents
Allegation relating to working from home
Of course, these claims have the potential to be considerably more valuable than an average COVID-19 infection claim and are not beset with the legal challenges claimant representatives are likely to face in successfully pursuing infection-related allegations.
Challenges for claimants
It is generally supposed that the reason for the low volume of claims received to date is a result of the inevitable legal challenges that claimants are likely to face in bringing a claim for COVID-19, the main hurdle being one of causation i.e. the legal requirement to prove that the injury alleged was caused by the defendant’s negligent breach of their duty of care.
A number of the respondents noted that the very nature of the allegations areis such that most claimants will not be able to evidence with certainty when they were infected by the SARS-CoV-2 pathogen that caused their disease. With community transmission very high at various points throughout the pandemic, it will often be difficult for an employee to show that they contracted COVID-19 whilst at work. It is believed that these challenges are likely to keep claimant solicitors and claims management companies at bay, particularly in view of the fact that most COVID-19 claims would be of a low value attracting only fixed legal costs.
To highlight these challenges, two respondents particularly referred to the recent decision of the Health and Safety Executive (HSE) investigation into alleged COVID-19 safety breaches at Burnley College following the death of teacher, Donna Coleman in December 2020. Whilst the HSE made findings that there were ‘numerous instances where Burnley College failed in its duties to protect the safety of its staff and students during the deadly second wave of Covid’ (including failure to adhere to social distancing requirements and failure to enforce face coverings) it could not ‘find that Burnley's failings directly caused Donna's death’. The family of Ms. Coleman disagrees and is appealing the decision.
One aspect that was referenced by a number of respondents however, was whether UK courts would perhaps be willing to adopt a broader approach to causation when considering COVID-19 claims, as they did in the seminal decision of Fairchild v Glenhaven Funeral Services [2002] UKHL 22.
In Fairchild three separate claimants sought damages following their contraction of malignant mesothelioma (a form of lung cancer). It was alleged that one of a number of different employers could have exposed the claimants to the single asbestos fibre that is required to cause the disease. In such circumstances the House of Lords (now the Supreme Court) was prepared to apply a different test of causation, one that looked at whether an employer ‘materially contributed’ to the claimant’s illness. If an employer had materially increased the chances of the claimants’ exposure (for example, by not proving the appropriate PPE, or failing to properly carry out the proper safety checks) then that was significant enough for liability to potentially attach to them.
In the context of this paper, if a claimant was able to persuade a court to apply the principles from Fairchild to a COVID-19 infection claim then this would allow them to rely upon an employer’s or a third party’s breach of their duties to protect against contraction (e.g. failure to enforce social distancing) rather than having to evidence that there was a directly causative link between the breach of duty and their contraction of the disease.
Whether a UK court would be prepared to apply these principles to COVID-19 claims is of course a matter for debate. At present we are unaware of any litigation that is seeking to test the point. If a court was prepared to go that far however, one could certainly envisage a very significant increase in the willingness of claimant representatives to bring low value COVID-19 claims to the market en masse.
Even in the absence of a court agreeing to apply the principles in Fairchild, most organisations we spoke to were of the opinion that under certain circumstances a claimant may also be able to surmount the requirements of the stricter, ‘but for’ causation. Respondents pointed to situations such as ‘large outbreaks at work’ or where the claimant was a ‘captive audience’ (e.g. prisons, care homes, off shore works etc.) as scenarios in which a court may be willing to find that on a balance of probabilities the COVID-19 transmission took place whilst at those premises.
Of course, the claimant must not only show that the contraction of the disease took place at the defendant’s premises but also that the defendant was negligent in not appropriately mitigating the risks of transmission. This would most likely be a very difficult threshold to meet, particularly in early/mid 2020 when government and HSE guidance was still being formulated and many organisations had to continue working with significant uncertainty as to the implementation of appropriate health and safety procedures. A large, and perhaps optimistic carrier, suggested in response that some claimant representatives may be reluctant to pursue such claims against employers who ultimately were trying their best in incredibly difficult circumstances. A court certainly would be likely to consider the rapidly shifting nature of COVID-19 health and safety guidance and would be unlikely to punish an insured who tried their best to manage the risks in the face of a truly testing and extraordinary situation, save for perhaps where the health and safety breaches proven were particularly egregious.
One thing appears certain: at present most insurers, law firms and adjusters consider that, in the absence of the application of Fairchild, UK courts are more likely than not to be disinclined to rule in a claimant’s favour without a clear case being made out that COVID-19 was contracted at the defendant’s premises as a direct result of the insured’s negligence. The reluctance of Claimant lawyers to issue formal proceedings would appear to be tacit confirmation that they also consider they will face major challenges in overcoming such arguments.
Shifting Landscapes
Whilst there appears to be contentment from carriers and those working on behalf of Defendants as to the low volumes of COVID-19 infection claims currently recorded, it also appears to be the view of the market that this issue is far from over.
In May 2021 the UK government agreed to hold an independent public inquiry tasked with examining the UK’s preparedness and response to the COVID-19 pandemic, and to learn lessons for the future (the Inquiry). In December 2021, Baroness Hallett was announced as the chair of the Inquiry with draft terms of reference suggesting the core topics will include management of the pandemic in care homes and hospitals, the government’s use of non-pharmaceutical interventions such as lockdowns and social distancing, PPE procurement processes and the financial support offered by the government to individuals and businesses.
The Inquiry is now beginning to move forwards in earnest, having only concluded its consultation as to the finalisation of the draft terms of reference on 7th April 2022. The process is likely to be very lengthy indeed and will address myriad issues around the circumstances of the COVID-19 pandemic in the UK and the UK government response to it. It is unlikely to release any conclusions prior to 2024 at the earliest. The Inquiry will undoubtedly comment specifically on COVID-19 in the health and care sectors in the UK, particularly in view of the significant number of deaths of care home residents and the UK government’s decision (now ruled as unlawful by the High Court) to release COVID-19 patients into those environments without undergoing COVID-19 testing. This may lead to the notification of additional claims as the Inquiry process moves forwards and conclusions are made public. To what extent such claims would be time-barred under the Limitation Act 1980 is yet to be seen. Some respondents were of the view that judges would be slow to strike out claims on this basis, notwithstanding the statutory three-year limit, in view of the need to come to an equitable outcome.
Alongside the COVID-19 Inquiry, two respondents pointed to the work of the Industrial Injuries Advisory Council (the body responsible for the administration of industrial injuries benefits), noting that changing views here may have a ‘trigger effect’, making it easier to evidence factual causation. The IIAC noted in March 2021 that they had been ‘considering the death data published by the Office for National Statistics (ONS) to the end of 2020…and found there is evidence of a doubling of risk for several occupations’ concluding that the council ‘is on a pathway to recommending prescription (of COVID-19 as an industrial disease) based on its observation of a clear association between occupation and increased risk’.
Ultimately, without useful precedent from UK courts to indicate how the judiciary are likely to approach differing factual allegations relating to COVID-19 infection, it will be difficult for the whole market to determine the best way of achieving a successful outcome for their clients. Whilst it would appear that proceedings will begin to arrive soon, and certainly over the next year, whether these represent the end of the discussiondiscussion, or a watershed moment is yet to be seen. For nownow, at least, the feared tsunami of claims has not materialised.
Samuel Ellerton – Regional Claims Lead, Senior Vice President
T: +44 (0)121 232 4563 | M: +44 (0)7787 277771
E: sam.ellerton@lockton.com (opens a new window)
Disclaimer
This article is in no way intended to provide legal advice. The reader should obtain independent legal advice from a suitable practitioner as required. Lockton Companies LLP does not accept any liability with respect to reliance upon the content or accuracy of this note.
