Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.

The topics we're focusing on this week include:

Coronavirus: will UK insurers cover business losses?

The UK government has designated the coronavirus, Covid-19, as a 'notifiable disease', giving businesses some hope that their insurance cover will respond to coronavirus-related losses. Businesses are increasingly facing disruption to supply chains, loss of customers and workforce illness as a result of the pandemic, any of which have the potential to affect revenue generation. However, businesses should check the terms of their cover carefully to see whether any potential losses are covered. Proving that coronavirus is the cause of any insured losses may be challenging where they are multiple intervening causes, such as disruption to supply chains.  Read more here...

Cyber risk warning as coronavirus spurs remote working

Employers telling staff to work from home to minimise the spread of coronavirus in the workplace should urgently review and bolster if necessary the cybersecurity measures they have in place, an expert has said. Cyber risk specialist Ian Birdsey of Pinsent Masons, the law firm behind Out-Law, said a shift towards remote working will enable many employers to maintain 'business as usual' operations over the forthcoming period, but he said there is already evidence that cyber criminals are seeking to profit from the public health emergency. Birdsey highlighted a warning from the National Cyber Security Centre (NCSC) in the UK that so-called 'phishing' attacks are likely to rise as the coronavirus outbreak intensifies. The NCSC said it had taken steps in recent days "to automatically discover and remove malicious sites which serve phishing and malware" and that those sites used coronavirus and its official name Covid-19 "as a lure to make victims 'click the link'".  Read more here...

UK Budget 2020: coronavirus business support package announced

The UK government has announced a package of measures to support public services, individuals and businesses affected by the coronavirus outbreak. The measures include expanded business rates reliefs; a business interruption loan scheme and grant scheme for small businesses; an extension of statutory sick pay (SSP) to employees advised to self-isolate or caring for others who are self-isolating; and a dedicated helpline for businesses seeking a deferral on tax liabilities. The government will also refund employers with fewer than 250 employees up to two weeks of SSP for each affected employee.  The government announcements come shortly after the Bank of England announced it was cutting the central bank interest rate from 0.75% to 0.25% with immediate effect, as well as providing additional liquidity to support banks in lending to small businesses. The UK banking sector has also confirmed that it will support consumers through overdrafts and loan and mortgage repayment relief where necessary, through trade body UK Finance.  Read more here...

Coronavirus: insurance coverage will depend on contract terms

UK businesses should check their insurance policy wordings carefully to find out if they are protected against coronavirus-related disruption, an expert has warned.  Recent news coverage about the designation of coronavirus, officially Covid-19, as a 'notifiable disease' by the UK government highlights the inconsistencies in the way in which different insurance policies deal with this type of disruption, according to Ben Hilary of Pinsent Masons, the law firm behind Out-Law. "Understanding whether they have relevant insurance cover is likely to influence businesses in the actions they take to contain the spread of coronavirus," said Hilary. "Businesses may look for cover under a number of different products such as business interruption cover or directors and officers insurance when considering, for example, whether to cancel planned events or to limit staff movement."  Read more here...

PRA tightens rules on outsourcing of data

Banks, insurers and investment firms should seek clarification from the UK's Prudential Regulation Authority (PRA) over their obligations around data when engaging outsourcing providers.  The regulator is holding a consultation until 3 April on proposed new guidance on outsourcing and third party risk management. The draft guidance sets out a range of requirements around data, including specific obligations around its location, classification and security. Those requirements effectively prescribe what until now have been considered good practice behaviours that financial institutions should already be familiar with in complying with data protection law and rules set by the Financial Conduct Authority. The PRA's requirements around the location of data, however, are subtly different to those contained in European Banking Authority guidance that is already in force. The differences require further explanation from the UK regulator given the potential implications for outsourcing contracts.  Read more here...

Access and audit: the PRA's outsourcing expectations

Financial institutions should consider calling on the PRA to reconsider guidance it has drafted around access and audit rights in outsourcing arrangements given the practical difficulties they could face in implementing its requirements. Agreeing rights to access, audit and request information held by service providers is something that financial institutions, in particular banks, will by now be accustomed to when negotiating outsourcing contracts. However, banks, insurers and investment firms, among others, will likely need to go further than they have before in relation to the access and audit rights they secure for both themselves and regulators if the PRA's proposals are finalised in their current form. Based on the current wording, there is a risk that financial institutions and their service providers will have different views of how the obligations can be met under contract, or indeed whether they are a matter for contract or the financial institution's internal policies, and clarification is needed on how the requirements can be met in practice.  Read more here...

Ireland's Consumer Insurance Contracts Act 2019

The Consumer Insurance Contracts Act 2019 could be a game-changing piece of legislation for insurers in Ireland. Aspects of the Act are controversial, with provisions such as the removal of the requirement for an insurable interest in contracts of insurance and the introduction of the concept of fraudulent misrepresentation being adopted notwithstanding resistance from certain industry stakeholders and despite the fact that lawmakers in the UK have so far decided against adopting similar provisions.  Ultimately the legislation is aimed at increasing consumer protection, but there are risks that certain provisions will increase the cost of compliance for insurance companies in Ireland and that those costs will ultimately be borne by the insured.  While the Act was finalised late last year, it has yet to commence. That is expected to happen shortly, so it is incumbent on insurers to prepare to meet their new obligations during this period prior to commencement.  Read more here...

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.