Skip to main content skip to search skip to contact

As first seen on Insurance Age


The turmoil caused by pandemics and politics in the past two years has created an increasingly litigious landscape and served to highlight the value and benefit of legal expenses to businesses, says Tim Evershed.


Although the Covid-19 pandemic has dominated the last 24 months, the UK has also undergone significant changes to its political and trading landscape due to Brexit. Together these two events have had a seismic impact on business, supply chains and people’s working lives.

The pandemic has turned conventional models of working on their heads. Businesses have had to navigate lockdowns, remote working and furlough, and are now assessing how best to return workers to offices as many employees re-evaluate their work-life balance.

“There were issues about home working, concerns about lay-offs and furloughs, [and worries] about Covid-related claims,” says Karen Cargill, chief client officer - management liability and D&O product lead at broker, Marsh Specialty. “In the UK, employment tribunals were closed for quite a while, and they still have significant backlogs. Then there were further concerns about a return to offices and things like vaccine mandates,” she adds.


Some businesses push employees to return full-time while others implement hybrid models with part-time office attendance and continued remote working.

A recent survey by the broker Gallagher, however, found that a third of companies are meeting resistance from their employees towards returning to the workplace, even part-time. In addition, a quarter of businesses are uncertain if they can insist their employees return. Businesses now fear a wave of complaints and potential litigation from their teams.

Neil Hodgson, managing director of risk management at Gallagher, says: “The return to workplaces is a complicated task for senior leaders at UK businesses. Keeping everyone happy can be challenging. While some employees feel that they do not need to be in the office, there is an awareness that leadership needs to implement policies consistently. But many businesses remain uncertain just how far they can legally mandate the return to workplaces – leading to concerns about litigation and complaints.”

As well as disrupting employment patterns, Covid also caused a lot of tenancy disputes. Many renters were furloughed and stopped paying their rent but were then given protection from eviction orders by the government. This meant that insurers who underwrite loss of rent indemnity and legal costs for landlords saw claims rise – from two or three months’ rent to six or even 12 months.

Rent guarantee

Chris Wilde, head of product at broker GRP, says: “There was movement in the landlord-tenant area. Property owners’ legal package for that marketplace was remarkably busy. The changing regulations that people were trying to keep abreast of, [whereby] landlords couldn’t remove tenants during a certain period of time, meant that rent guarantee was being looked at very closely.”

Wilde says that claims stemming from the pandemic, and the complicated issues around processing them, caused several insurers to withdraw cover from the legal expenses market. In addition, property legal disputes driven by pandemic-related circumstances were not confined to the rental sector.

“There’s been a lot of focus on [home improvements] during the pandemic,” explains Tony Buss, managing director at insurer ARAG. “That means a lot more work has been done to improve people’s homes by tradespeople, and it doesn’t always go as expected. There are lots more disputes there. Many of them are due to delays in receiving materials, caused by Brexit,” he says.


Brexit has also triggered an increase in contract disputes in other areas, and issues around worker status as free movement has ended. Meanwhile, worker status is also under review in the gig economy.

“We’ve seen the Uber [legal] cases and the Deliveroo cases that have now crystallised. If you hired someone on a casual basis in the past, now they’re more likely to be considered as an employee. If they’re an employee, they’ve got employment law rights. So, a legal expenses insurance policy will protect an employer from any potential claims in the future,” says Stephen Moore, partner and head of employment at law firm, Ashfords.

Moore says that all these issues have combined to underline the value of legal expenses insurance (LEI) to insureds.

He adds: “The risk of a claim during a costly time where people are being laid off makes LEI ever more valuable. Cash flow may have been difficult but, at the same time, if you’ve got the legal expenses insurance in place it protects you against those expensive claims.

“It offers financial protection, security, and a legal advice helpline, so it avoids [you] having to go down the road of engaging a solicitor. It is about cash flow and managing cost and knowing where you are over the whole 12 months, knowing what your legal spend will be if you get into a dispute.”


Although some capacity has withdrawn from the market, Del Sharman, director at broker Pound Gates, says cover is still available, although rates have increased.

“It has been driven by the costs of claims, particularly around employment matters, and the cost of the legal helpline being busier,” Sharman says. “A lot of the issues that arose during the pandemic were untested from an employment law perspective. What if a staff member returned to work and contracted Covid? How would you stand as an employer? That’s uncharted territory.

“The policy also includes access to another helpline around crisis containment. That can be reputational issues spreading on social media and what that information might do to a business. That’s a beneficial addition to the legal expenses package, and the insurer has partnered with a PR firm that manages the helpline. They can provide policyholders with that expertise, reassurance, and guidance.

“It has really evolved from the legal expenses of old, which was just employment disputes – maybe property disputes, contract disputes if you were lucky. It has helped bring legal expenses to the fore and show clients how it can help them run their businesses.”

Buss says that ARAG’s legal helpline was inundated during the lockdown and highlights the additional services that insureds have drawn on during the pandemic. This includes templates for legal documents, such as employment contracts, which can be downloaded and tailored to the insured’s needs.

He adds: “That area has also grown significantly during Covid. It’s a joined-up service and it goes hand-in-hand with the insurance cover because, if the problem still can’t be resolved, the insurance kicks in.

“We also offer counselling, which has been used a lot during [the pandemic]. Wellbeing has been high on the agenda for lots of businesses. We also have a crisis helpline.


Buss concludes: “Brexit and the pandemic have proved an interesting combination, and we have seen increased demand and usage of the helpline. Its profile was raised, people utilised the cover and, rather than having to sell it to people, they were coming to us saying they needed the cover.

“It is now becoming a standard sale. It is not necessarily the last thing on the agenda anymore. Everybody is now expecting to have legal expenses offered to them. If they don’t, the broker runs the risk of letting down the client. That’s something that they could have bought. They could have protected themselves.”


Disclaimer - all information in this article was correct at time of publishing.


Contact us