Proposed insurance coverage for business interruption losses besides damage after acts of terrorism has been welcomed. The UK Government intends to legislate as soon as parliamentary time allows to amend the Reinsurance (Acts of Terrorism) Act 1993. Proposed is an extension of the cover provided by the government-backed terrorism reinsurer Pool Re to include business interruption losses that are ‘not contingent on damage to commercial property’.
Julian Enoizi, chief executive, Pool Re, said: “We welcome and applaud the Government’s commitment to amend the 1993 legislation to allow Pool Re to be the first of the global terrorism pools to overtly extend its cover to include terrorism related non-damage business interruption.
“After months of extensive collaboration between ourselves and the Government, today’s announcement represents another landmark moment for the insurance industry’s ability to provide a comprehensive response to acts of terrorism in the UK and demonstrates the strength of public/private partnership in disaster risk financing.
“This amendment will close the terrorism insurance gap for businesses up and down the country, which, combined with our efforts to make cover more affordable for SMEs and regional businesses across Great Britain, will increase the resilience of the economy. Businesses can be confident they will be covered in the event of a terrorist attack, and able to get back on their feet quickly for the benefit of their community, customers and suppliers.
“Pool Re will continue working in partnership with the government to increase resilience in the economy by influencing mitigating behaviour and incentivising implementation of government accredited protective security measures. With the recent launch of our on-line vulnerability self-assessment tool, we commit to making those resources available to smaller businesses.”
Under the 1993 Act, Pool Re could only pay out if physical damage has occurred to commercial property; so that businesses, inside a police cordon, that suffer financial loss through being unable to access their property or to trade, are only covered if there has been physical damage by a terrorist act. As Pool Re said, the terrorist attacks of 2017 at Westminster, Manchester and London Bridge highlighted the gap in UK provisions for terrorism insurance coverage. Pool Re has already responded to the threat of a cyber trigger and from April 2018 Pool Re will extend its cover to include material damage and direct business interruption caused by acts of terrorism using a cyber trigger.
