Specialist terrorism cover – avoiding chinks in the armour
Today’s terror attacks come in many forms – from homemade bombs to suicide bombers, knife and acid attacks to vehicles ramming pedestrians. Many attacks are committed by a so-called ‘lone wolf’ assailant, others by small cells of individuals. All are hard to detect and defend against, all leave appalling human tragedy in their wake, and many create a high level of ongoing distress for businesses caught up in the chaos.
As we saw in the aftermath of the Manchester Arena bomb and the London Bridge attack, local businesses that were affected, directly or indirectly, looked to their insurers to cover loss of trade. However, as many firms discovered, gaps in their insurance programmes left them exposed to losses linked to business interruption.
It is therefore important that insurers and brokers keep reinforcing the message that general liability and terrorism policies do not always provide the degree of protection that businesses require in the face of a marauding terror attack which causes no physical damage to property but results in bodily injury to individuals. And despite the welcomed extension of Pool Re in July of this year to provide some non-damage business interruption protection, there are still other physical and monetary exposures companies face when caught up in a terror attack.
Specialist terrorism cover helps bridge the gaps in more general covers. Typically providing more than loss adjusting services and financial support, many policies now offer a combination of pre-event risk management, practical emergency assistance on site, emotional support services for staff and customers, as well as financial support to cover costs to help them get their business back on track.
Deadly Weapon Protection insurance is a good example of this new genre of cover in action, as it is a policy specifically designed to help organisations prepare for and handle the emotional aftermath of an attack; as well as to manage the financial impact of business interruption, reputational damage and legal liability that any such an incident can cause.
Insurers offer access to specialist assistance including security teams to prevent further incidents; counselling services to console victims and their families and other staff members; and expert crisis PR advice to help handle media and monitor social media following an attack. Many policies also offer a hands-on, proactive claims service with quick decision-making protocols as well as pre-event planning on what to do should an event occur, designed to help staff to respond better and think more clearly in the face of an attack. This training is important, because it demonstrates an organisation’s commitment to the highest standards of employee and customer safety which can be vital when defending potential liability claims.
The London market is at the forefront of standalone terrorism cover, and coverage has been extended to cover broader perils such as strikes, riots, civil commotion, malicious damage, revolution, rebellion, insurrection, coups d’Etat, civil war and war on land. Contingent business interruption perils such as prevention of access to premises and actions of civil military authorities are also becoming more commonplace in wordings and the sub-limits and distance radius associated with these perils are beginning to increase. Terrorism liability insurance is also more widely purchased either as a sub-limit within a traditional terrorism insurance policy or as a standalone coverage.
With a competitive marketplace in London for a range of terror-related risks, it is more important than ever that the insurance industry works together to educate clients across the UK to ensure they have appropriate cover that responds as expected should the worst happen.
About the author:
Chris joined Beazley in April 2011. His role within Beazley is head of the Terrorism, Political Violence and the Kidnap & Ransom underwriting team. Chris started his career at Willis in the Marine Reinsurance market in 1990 and joined the Political Risk market in 1995 whilst still at Willis. In 2004 he moved to Marsh and assumed responsibility for the Bowring Marsh Terrorism and Political Violence business in 2006.