Modernising the Workplace

Technology holds the solution to post pandemic labour shortages

2023 is likely to see further disruption to scheduled passenger flights across UK airports as labour shortages within the industry look set to remain an issue. These staff shortages (both in terms of recruitment and retention) impact across the board: from airport staff to third-party providers, ramp agents and UK Border staff. UK airports and airlines are finding it particularly challenging to hire workers from the European Union in the light of restrictions imposed following the UK’s departure. In addition, many job cuts in the industry left the existing workforce sceptical about returning to the airline business. Jobs need to be redesigned and new business models and decision-making processes need to emerge to help with the labour shortage. Technology has a key role to play and this must be introduced in partnership with employees. The buzzwords will be automation, electrification, digitalisation and data sharing. It is no longer a question of re-using old strategies but defining new norms for a sustainable future workplace.

The HSE will continue to focus on reducing work-related ill health and stress

One of the key strategic objectives pursued by the Health and Safety Executive (HSE) is to reduce work-related mental health issues and stress. We predict that HSE inspectors will take keen interest in company policies for managing stress in the workplace during future investigations of workplace incidents. Construction sites in particular are now targeted as part of a health inspection initiative supported by the WorkRight Construction campaign. The campaign is raising awareness of health issues in relation to moving and handling materials to improve the long-term health of those working in construction. HSE inspectors will be visiting construction sites to check employers and workers know the risks and plan their work accordingly. Any employers who are not compliant are likely to face at the very least the service of improvement and prohibition notices. We also expect to see progression of objectives such as the launch of an occupational health and safety qualification in prevention and management of work-related stress.

Change of infrastructure will impact cyclist and e-scooter claims

Since emerging from the COVID-19 pandemic, there has been a marked change in the profile of claims being made against highway authorities, particularly in relation to cyclist and e-scooter claims. In May 2020, the Department for Transport announced special funding to promote cycling safety schemes, which led to a wide range of activity designed to promote cycling as an alternative means of transport. With such schemes there inevitably comes a change in infrastructure such as newly installed kerbing to create cycle lanes, extended kerbs to narrow road entrances as part of traffic calming measures and newly installed speed bumps. As greater focus is given to encouraging more environmental means of travel and changes are made to the existing infrastructure, there is likely to be an increasing number of claims against highway authorities from cyclists and riders of e-scooters. While changes to infrastructure have always been commonplace, with more cyclists and riders on the highways, there is now a greater risk of accidents occurring and a higher chance of more significant injuries being sustained.

Ransomware attacks will continue to dominate cyber-security landscape

Ransomware attacks are becoming increasingly sophisticated as cyber-criminals evolve their methods by using expansive infrastructure and multiple malware tools to exploit vulnerabilities. Stolen credentials obtained by phishing scams remains one of the most common ways to launch ransomware attacks on businesses and government organisations. The shift to a hybrid working environment and virtual conferencing alongside the development of ‘deep fake’ technology has been a crucial factor. The ever complex threat landscape requires a multi-layered solution that combines anti-malware, data loss prevention, email security, endpoint detection response, vulnerability assessment, patch management, remote monitoring and backup capabilities. Staff training and public education also have key roles to play.

Expect more regulation on protecting the workforce and the accountability of companies for their supply chains

A new Modern Slavery Bill was announced in the Queen’s Speech on 10 May 2022 and it awaits further Parliamentary debate. Its purpose is to update the existing Modern Slavery Act 2015 and to “strengthen the protection and support for victims of human trafficking and modern slavery and increase the accountability of companies and other organisations to drive out modern slavery from their supply chains.” The Bill is also expected to introduce criminal offences and financial penalties for non-compliance. Globally, legislators have taken significant steps in recent years to introduce responsibilities on companies to prevent harm arising from their operations; this is part of a broader trend of formal legal obligations beginning to align with voluntary business human rights standards, in particular the UN Guiding Principles on Business and Human Rights.

Gender diversity linked to greater action on climate change

Gender inclusivity and opportunity is critical in both modernising the workplace, attracting talent and generating the positive effects in addressing climate change for businesses and wider society. The European Central Bank published a working paper in February 2022 with the eye-catching statement that a 1 percentage point increase in the proportion of female managers within a firm is linked to a 0.5% decrease in CO2 emissions. Further, firms with greater gender diversity reduced CO2 emissions by about 5% more than those with more male managers. Businesses must focus on representation and engaging women in leadership pipelines, particularly intensifying efforts to get more women into STEM education and roles. This therefore starts earlier in the employment life cycle with the need for government and organisations to engage women (girls) in the green economy and climate change challenge from school age to develop the pipeline for gender equity in the workplace for the future.

The next 12 months is likely to be a fertile ground for building works… and neighbour disputes

Recent history has shown that when homeowners cannot move on, they extend and improve their existing dwellings. Notwithstanding the gloomy financial outlook, we anticipate some of the nation’s homeowners will continue to spend the nest eggs that they built up during the COVID-19 pandemic on building works and other home improvements. This will filter down to the legal indemnity sector through the issue of restrictive covenant and building regulations policies. More building work is also likely to lead to more neighbour disputes. Accordingly, we also expect the upward trend for claims against these policies to continue.

Telemedicine technology is here to stay but may increase risks

COVID-19 significantly reduced the frequency of face-to-face consultations and caused a seismic shift to telemedicine, particularly the use of video consultations, which is here to stay. Telemedicine technology reduces the spread of infectious diseases in clinics and enables swift access to healthcare at a distance with associated cost and time-saving efficiencies. However, the virtual doctor-patient relationship poses risks. Doctors will need to exercise caution to avoid misdiagnosis and to ensure that older or less tech-savvy patients remain able to access medical services. Doctors should have a low threshold for calling their patients in for face-to-face consultations, physical examination and assessment. If not, it is inevitable that serious conditions will go undiagnosed, increasing claims brought by patients.

Genomic technology will provoke new questions

The UK is at the forefront of the use of genomics (the body’s genes) in healthcare. This allows a more targeted, effective and tailor-made approach to patient care based on an individual’s needs. It can lead to early diagnosis or even the prevention of medical conditions. But genomics may raise patient expectations and when expectations are not met, litigation often ensues. As genomics play a larger role in healthcare, questions relevant to medical negligence liability will start to shift from “why didn’t you diagnose my condition?” to “why didn’t you prevent my condition from developing in the first place?” Genomics, like AI, is a new frontier which introduces new legal issues. Not only will there be different questions asked around liability, but they will be asked of different people. Genomics will see a new hybrid professional, the bioinformatician, whose role will straddle medicine and large data and who will sit at the heart of the provision of genomic-based healthcare. What’s more, questions will be asked by different people: not only will injured parties bring claims but we can expect to see representative actions pursued by sectors of the population who perceive unfair discrimination in the creation and availability of such personalised healthcare.

Usage and behaviour based pricing will make further inroads

As consumers look to generate savings on their outgoings during the cost of living crisis, behaviour based insurance products, such as motor, are likely to generate increased business. While publicity around policies involving telematics data has often focused on younger and ‘unsafe’ drivers, more people may now be prepared to re-evaluate these policies given the prospect of reduced premiums and additional discounts. Beyond ‘pay how you drive’ policies, other types of coverage, such as ‘pay-per-mile’, may find a new audience. The mass adoption of remote working caused by the pandemic has been maintained to a significant extent, and usage based coverage may prove to be attractive to drivers who no longer contend with the daily commute five days a week.

Surveyors and Valuers: The sustainability of values will be the most important issue

The sustainability of values will undoubtedly be the single most important issue the surveying and valuation profession will have to grapple with in the short, medium and longer term. The pandemic has brought about a seismic change to working patterns but will the surge in demand for more rural locations be maintained? Will the pressure on those in the High Street serving commuter needs remain? How will current office repurposing play out in terms of space needs going forward? With many economies now heading into recession and inflationary pressures unlikely to ease anytime soon, matters are compounded by the risk that real estate values may fall as businesses and consumers alike struggle to fund borrowing costs after a decade of ultra-low interest rates and the retail/leisure sectors find themselves squeezed as belts tighten. Finally, and perhaps most significant of all, is the impact that the current energy crisis, coupled with the crucial need to address climate change, will have on the entire sector in terms of attributing a value to any particular building’s energy efficiency capabilities. Never has the phrase ‘valuation uncertainty’ appeared more appropriate.

The Protect Duty will become the focus of cross sector attention as a key social and governance issue

The Protect Duty was included in the Queen’s Speech in May 2022. There will be significant implications for businesses and the insurance industry arising out of this proposed new duty to protect the public from terrorist attacks at publicly accessible locations. Underwriters will need to understand the new exposures for businesses, particularly those in the retail and entertainment sectors. Brokers will need to be more aware of terrorism risk generally and reinsurers will be interested in the accumulation of risk. Responses may include increased premiums, policy drafting which restricts or excludes cover and a review of indemnity limits. Improvements made to security are however likely to have wider benefits, potentially preventing other crime and antisocial behaviour, thereby reducing insurers’ overall exposure.

Germany: German Supply Chain Act will force companies to implement new risk management

While the details for a European Supply Chain Directive are still discussed, a German Supply Chain Act came into effect on 1 January 2023. At first it will be applicable to companies with more than 3,000 employees in Germany, but from 2024 onwards that figure will drop to 1,000 employees. It aims to protect basic human and environmental rights and establishes new duties with regard to supply chains, including direct and indirect suppliers. In particular, companies will have to conduct a risk analysis in order to identify relevant risks as well as risk management to prevent and remedy violation of protected human and environmental rights. Many provisions remain vague, but companies that do not fulfil their obligations can be severely fined (up to 2% of annual revenue) and excluded from public contracts. In such cases, claims against directors will come into focus.

Canada: Canada’s proposed modern slavery bill could increase D&O exposure

Unlike many jurisdictions, Canada has no modern slavery legislation. This could soon change for entities that produce, sell or distribute goods, import into Canada goods produced outside the country, or control entities that do so. The Fighting Against Forced Labour and Child Labour in Supply Chains Act could become law as early as January 2023, creating reporting obligations for Canadian-listed public companies that meet specific financial or employee thresholds, and potentially foreign businesses that do business in Canada. These businesses will be required to report steps taken to reduce the risk of forced labour and child labour being used in the supply chain. Failure to comply with the annual reporting obligations could result in fines up to $250,000, which may also apply to directors and officers, potentially increasing D&O risk.