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The impact of Covid-19 on legal expenses insurance

As the end of the furlough scheme is approaching, Rosie Cowling – solicitor and legal helpline team leader – looks at the likelihood of increased disputes arising from Covid-19.

“It’s been no surprise that legal advice helplines across the UK have been busy during the pandemic. Although there were much fewer injury claims, as the nation went into lockdown and largely stopped using their cars, customers worried about redundancy were keen to seek advice.”

Like Minster, other legal service firms have found enquiries to legal helplines spiked around early March when people became aware of the coronavirus and its impact on their jobs and livelihoods.

Many businesses reacted to the potential commercial impact of Covid-19 by rushing through redundancy programmes before the announcement of the furlough scheme on 23 March.

Naturally, this has created some concern that redundancies may have been carried out unfairly and as a result we have seen many more calls from customers requiring legal support for unfair dismissals.

Since the furlough scheme was announced, employment enquiries regarding unfair dismissals have steadied but we have continued to see a high volume of enquiries relating to furlough. In particular, customers have sought clarity on what the scheme means and advice on the agreements they have had to sign.

Some employers have abused the furlough scheme by asking employees to continue to work, with HMRC investigating over 8,000 reports of potential furlough fraud. Meanwhile, there are also cases alleging unfair treatment after employees have reported their employer for not following Covid-19 H&S guidelines.

As well as employment matters, legal advice helplines have seen an increase of consumer and property matters. At Minster, we found that more customers were asking for legal advice to manage holiday cancellation disputes, as well as property disputes stemming from individuals spending more time at home.

Our recent experience would suggest we’ll most certainly see a new wave of job-related enquiries when the scheme ends in October and organisations make decisions on employment. This will include enquiries relating to redundancies, reduced salaries and TUPE arrangements as a result of acquisitions and mergers.

Collaboration across the claims industry has been key in ensuring customers continue to get the legal support they need. I expect a big increase in demand for legal expenses insurance once the government implements the Civil Liability Act in full next year. The Act removes the right for injured people to access legal services for non-fault claims under £5000. In future they will have to pay for it themselves, however, the government believes legal expenses insurance can fill the gap. The new law could herald the biggest shake-up in the LEI market for decades.

Despite this, consumer knowledge around legal expenses is a big issue and many people who already have it as part of their home policies might not even realise they do. Given the impact of Covid and increased need for legal support, it’s more important than ever that the industry works together to ensure customers are educated and have access to legal services.”

– Rosie Cowling, solicitor and legal helpline team leader