I strongly recommend this article in today’s Financial Times: Who Pays the Bill? The Coming Deluge of Pandemic Legislation.
As Alex Barker, Kate Beioley and Jane Croft point out — many trial lawyers are mobilizing for what could be “an almost bottomless well of negligence claims against employers and businesses big and small.” Insurance companies are very much in the front line. If they lose their cases against exclusion of business interruption insurance their very survival is on the line. There are also going to be many cases against the decisions of national and local governments.
This is a substantial issue. The large scale of potential liabilities could be a substantial brake on recovery from the pandemic. Minimizing the dead weight costs of such disputes, which benefit mostly the lawyers not their clients, will be crucial.
My recommendations, expressed in several contributions to this blog, are for a form of government supported retrospective insurance to cover rent and debt servicing and other contractual obligations. Retrospective insurance is not easy. Still for now there is a case for government-backed compensation, to avoid substantial financial resources being diverted into compensation disputes. But the challenge this time is the scale of losses involved. What is appropriately covered? What can be afforded? Should we, as Singapore has already done, introduce legal reforms to encourage or require mediation or reconciliation?
However these disputes are resolved this time around, we also need even now to be thinking about next time. When the next public health or other large scale disaster takes place, we need to have the rules of compensation set out clearly in advance, to avoid getting sidetracked in arguments about costly financial settlement. State backed business interruption insurance of some form will then surely play a crucial role.