Hiscox has greeted with interest news that Pool Re is to extend its terrorism cover in the wake of the Westminster, Manchester and London Bridge attacks.
The government said it would enable Pool Re to cover companies against business interruption that is not caused by physical damage. The move will require an amendment to the 1993 act which created the state-backed reinsurer, which will happen as “soon as parliamentary time allows”, the government said.
“This announcement is not unexpected, as there is a clear gap in Pool Re’s protection that has become increasingly apparent in recent years as the nature of terror attacks has changed,” says Richard Halstead, war, terrorism and political violence underwriter at Hiscox London Market. “This amendment will bring them into line with the private market which already offers this form of protection. Ultimately, the industry has an obligation to ensure that appropriate cover is available so this is good news.”
Pool Re has already announced it will extend its cover to include material damage and direct business interruption caused by cyber terrorism.
Standalone terrorism insurance – and Pool Re – was created in the aftermath of the IRA bombings in 1993, which focused on destroying buildings in city centres on the British mainland. But with the Northern Ireland ceasefire and the rise of radical Islamic terror groups, such as ISIS, the main threat now comes from small groups of self-radicalised terrorists using improvised weapons, such as vehicles, knives or homemade explosive devices.
For businesses, their biggest risk has changed from being bombed out of your premises to now being locked out of them by a security cordon thrown around the neighbourhoods surrounding an attack site. Borough Market, a thriving bar and restaurant area in south London, was closed for 11 days after the London Bridge attack, in which eight people were killed.
Hiscox has for over a year been selling its own solution to the changing face of the terrorist threat. “To respond to a wider range of threats we have created our Malicious Attack policy. It doesn’t matter whether an attack is the work of a terrorist or a disgruntled employee the impact can be the same on a business. We focus on helping our clients deal with the effects of the attack, rather than on its motive.”
Hiscox’s Malicious Attack policy includes loss of attraction cover within a one-mile radius of an attack, counselling costs for employees and access to crisis management consultants if a company is caught up in an attack.