Friday, 23 March 2018

UK Insurance Cover For Terror Attacks Upgraded

Companies in the UK affected by future terror attacks will be covered for non-physical damage for the first time by Pool Re, the government-backed insurer, under changes set out by the Treasury on Thursday.

The changes, announced exactly one year after the Westminster terror attack that claimed five lives and injured 50 others, will be largely welcomed by businesses.

Many companies suffered financial losses after last year’s terror attacks in Manchester and London that were not covered by their insurance policies.

But there is likely to be unease about the timing of the changes, which will not go into effect until the government can find a space in the parliamentary calendar.

Pool Re does not sell insurance directly, but provides back-up to other insurers, enabling them to sell terror insurance to customers.

The group was set up in 1993, when the major terrorist threat was large-scale bombs targeted at buildings. In recent years, the nature of the terror threat has changed, with attackers using cars, knives and homemade devices to target individuals.

The London Bridge attack last June caused an estimated £1.4m of economic losses, as some stallholders and restaurants in Borough Market were forced to close for nearly two weeks. But because the terrorists did not cause any major physical damage to their properties, Pool Re did not pay out after the incident.

The only incident that Pool Re paid out for last year was the Manchester Arena bombing in May, which caused physical damage to buildings.

Neil Coyle, the Labour MP for Southwark & Old Bermondsey, has been campaigning on behalf of the businesses hit by the Borough Market terror attack.

He said on Thursday that the government should prioritise pushing the legislation through to ensure the proposed changes go into effect.

“It is overdue and no further excuse for delays,” he said. “The government must act now given it has an almost vacant legislative agenda.”

Julian Enoizi, chief executive of Pool Re, said that the change was “a landmark moment for the insurance industry’s ability to provide a comprehensive response to acts of terrorism in the UK”.

He added that the expansion of the scheme should encourage small businesses to buy cover.

“Take up of terror insurance by small businesses and outside major cities is very low,” he said. “We want to make the cover so affordable that it is an easy decision to make.”

Not all of the terrorism insurance policies available in the UK are backed by Pool Re, and the government has been concerned that any changes to Pool Re’s remit could distort the wider market.

A spokesperson for the Association of British Insurers trade body said on Thursday: “Pool Re plays an important role and we support updating its scope to reflect the changing nature of terror attacks.

“It is important to remember there are already insurance products that offer business interruption cover where there has been no physical damage to the insured premises from a terrorist attack, but this should help cover become more widespread provided the legislation is well thought-through.”

SOURCE: The Financial Times Limited

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