Important Changes to Terrorism Insurance
Managing Director at Russell Scanlan, Bryan Banbury, discusses the growing need for changes to terrorism insurance for businesses and the options now available.
2017 has seen the terror threat in the UK and across Europe reach an all-time high, with the official rating reaching ‘critical’ status twice in the space of just a few months in Britain.
In the wake of the devastating attacks in Borough Market, Westminster, Manchester and other European cities, business owners have been calling for drastic changes to their insurance policies, which have been seen to have significant gaps, causing thousands of pounds of losses for hundreds of companies.
In the past, terrorism insurance has covered business interruption caused by damage to premises – mostly geared towards the use of explosives in attacks. However, the nature of attacks has changed in recent years, as more and more events involve the use of handheld weapons and vehicles to cause human casualties.
This type of incident results in businesses being forced to close for long periods of time despite no actual physical damage – with no insurance pay-outs to cover for the loss of income.
The Financial Times has found that one business caught up in the Borough Market attack in June estimated its losses at £35,000 due to lost sales, staff expenses and wasted stock – a total which was not covered by its insurance policy.
Retail, hospitality and entertainment businesses are particularly vulnerable to losing out in this way – with more and more terror events taking place in and around these types of venues and tourism taking a huge hit in certain cities.
Given the changing face of terrorism in this country, insurance provider NMU has now added non-damage business interruption (BI) cover to its terrorism insurance policies. As well as damage to own and third-party property, the changes mean that the cover will also pay out in the event of the use of vehicles, hand-held weapons and explosive devices to cause death and injury.
Commenting on the product improvements, NMU Executive Director, Duncan McClean said: “The evolving nature of terrorism incidents brings a whole new set of risks and exposures not previously considered or catered for, particularly in relation to BI losses. Recognising this, our new terrorism product has been updated to specifically include the critical protection that policyholders need.”
Whilst the devastating effects of terrorism will still cause huge upset and trauma to victims, these changes will bring some much-needed protection for vulnerable business owners in the aftermath of an attack. The NMU changes are a great leap forward, helping to manage the risk and ensure businesses can bounce back more easily.
If you would like to talk about your terrorism cover and the new options now available, don’t hesitate to get in touch with one of our team.