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As first seen on Insurance Times


The cost of the living crisis is gripping the economy, meaning inflation is higher than it’s been in more than 30 years, Andy Talbot, head of sales at Arag, highlights the ’cost of doing business crisis’ facing firms in a post-pandemic world.


Getting much less media coverage is the simultaneous ‘cost of the commerce’ crisis that businesses are having to navigate. Organisations of all shapes and size are feeling the squeeze between the rising cost of everything from employees and energy to raw materials, and customers who are unwilling or simply unable to pay increased prices.

Earlier this year, the British Chambers of Commerce warned of an impending “cost of doing business crisis” after its survey of more than a thousand firms revealed that about three quarters were having to put up prices because of rising costs, with renumeration and utility bills topping the list.

This is another ‘new normal’ that businesses are having to navigate, and brings with it a host of legal questions and potential pitfalls.

Furlough and other support schemes did a remarkable job of keeping many companies afloat, but they only provided essential life-support from which many are still just emerging.

Now, businesses are facing a different set of challenges, as they try to rebuild after two years of pandemic-induced stasis.

Post-pandemic challenges

One such challenge has been managing the difficult balance between having employees back in the workplace, observing the latest government guidance on living with Covid-19 and the impact that successive variants of the virus still seem to be having on absence levels.

There are also a lot of questions around contract law, as companies seek to negotiate new terms or interpret agreements in the radically different commercial environment that 2022 presents. Inevitably, many are also looking for help in trying to recover commercial debts.

But businesses are equally conscious of the government’s determination to recover any pandemic support that was not claimed legitimately. The various schemes were very hastily introduced with sometimes complex qualifying criteria, and firms may need professional help demonstrating to HMRC that all the financial support they received was honestly claimed.

While some economic indicators, such as growth and unemployment, still appear relatively positive, there is serious concern that inflation could tip the delicate balance, pushing us into another recession with the many headaches that will create for companies.

Some businesses positively thrived during the pandemic, delivering new services or exploiting high demand and the spending power unleashed by the effective suspension of certain sectors, such as travel, entertainment and hospitality, but many have barely survived the past two years.

Legal protection appetite

It is little surprise that the appetite for legal advice and protection has never been higher. Despite the closure of many businesses and the loss of some commercial policyholders in 2020, the number of SMEs insured by ARAG grew by roughly 25% in 2021.

The source of the growth is clear from the results of the extensive broker survey that we commissioned at the end of last year. About half of all the brokers questioned by independent researchers had already seen an increase in client demand for legal protection, over the previous 12 months.

An even bigger proportion of brokers said that they expected demand to grow further, this year.

The appetite for Employment Practices Liability cover seems even stronger, with almost three quarters of brokers saying they had seen demand from clients increase over the past year and similar numbers expecting it to grow further in 2022.

When asked about the reasons why they thought demand for commercial legal protection was rising, the most commonly cited reason was a generally heightened awareness of legal risks brought about by the pandemic.

The past two years have posed a lot of tricky legal questions for businesses and created some very difficult contractual and employment situations. That landscape has certainly changed, but the terrain does not look like it will be any easier to navigate.


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


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