The Business Insurance Bureau

Terrorism Insurance
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Introduction

Acts of terrorism can take many different forms, but typically include bombing, assassination, hijacking or random killings. They are carried out by organisations for political rather than military purposes and by groups generally too weak to mount an open assault on a government or state.

Although the roots for terrorism lie in ancient Greece, it is now regarded as a modern tool, sometimes utilised to devastating effect by individuals who feel alienated and possibly unrepresented by the society in which they live.

Governments find terrorism very difficult to prevent and all the while its psychological impact on the public is increasing because of extensive coverage by the press and international media.

POOL RE

In common with many other countries, the UK has had to live with the threat of terrorism for a number of years. In response to the threat from the IRA’s mainland bombing campaign in the early 1990’s, the Pool Reinsurance Company Limited (Pool Re) reinsurance facility was established in 1993 as a mutual re-insurance company to provide cover for property damage and business interruption losses following fire or explosion caused by terrorist acts.

Pool Re is owned by its member insurance companies writing business in the UK commercial property insurance market, with HM Treasury backing as reinsurer of last resort.

11TH SEPTEMBER 2001

The terrorist atrocities in the United States of America on the 11th September 2001 had the effect of changing both the availability and the methods of providing terrorism insurance cover throughout the insurance industry worldwide.

THE CURRENT SITUATION IN THE UK

Since the beginning of 2003, the situation exists whereby most commercial property insurers provide very little, if any, cover against acts of terrorism in their standard policies.

Policyholders are now free to decide whether or not they wish to purchase the insurance cover provided by Pool Re, via their insurer, to protect them against terrorism risks.

More Recent Attacks:

Finsbury Park terror attack: Just after midnight on June 19 2017
A van driver mowed down Muslim worshippers on Seven Sisters Road near Finsbury Park mosque in the very early hours of June 19.

London Bridge terror attack: June 3 2017
The London terror attack killed eight people and injured many others on London Bridge and in nearby Borough Market on June 3.

Manchester terror attack: May 22 2017
The Manchester terror attack killed at least 22 people and injured 59 others at an Ariana Grande concert at Manchester Arena on May 22.

Stockholm attack: April 7 2017
Four people were killed and at least fifteen were injured when a man drove a truck down a busy shopping street.

What is and Act of Terrorism?

There is no single agreed definition of terrorism. A definition will appear within a policyholder’s policy but this will vary depending on the insurance company concerned and the nature of the cover.

Pool Re uses the following definition:

Acts of persons acting on behalf of or in connection with any organisation which carries out activities directed towards the overthrowing or influencing by force or violence of Her Majesty’s Government in the United Kingdom or any other government de jure or de facto.

A typical wording may also exclude harm or damage to life or property, or the threat of such harm or damage, and make specific mention of nuclear, chemical, biological and radiological methods being excluded.

Frequently Asked Questions

What targets do Terrorists attack most?

Regrettably there is no easy answer to this question. In general, high media profile targets i.e. anything that will get lots of media attention. These targets are also likely to include high value property or so called soft targets like hotels, airports, banks or bus stations. Industrial locations are generally less welcoming to the public and usually have more physical security.

Whereas shopping malls may have good CCTV and physical security, they are also often of high value with easier access for a terrorist to slip in unnoticed due to the number of people milling about.

How is the Terrorism act defined or described?

We use a broad definition of Terrorism e.g. Terrorism is an unlawful act, including the use of force or violence, by person or group, acting alone or on behalf or in connection with any organisation(s). The act could be committed for, political, religious or ideological purposes, trying to influence government and/or putting the public in fear, for such purposes.

It is an intentionally wide definition, so that we can extend coverage for pressure groups such as animal rights and environmental campaigners.

Can you cover assets Worldwide?

Except for Sanctioned countries, yes. Worldwide coverage is available. In some countries, due to the local regulators, cover must be bound as a reinsurance of a local company.

What kinds of insurance cover claims caused by terrorism?

The following forms of insurance must offer cover for claims arising from terrorism.

work-related accident insurance

civil liability motor vehicle insurance (civil liability only, not full-risk insurance)

civil liability insurance for fire and explosions for institutions which are generally accessible to the public

common risk fire insurance (e.g. for homes)

accident insurance

sickness insurance

life insurance

For all other forms of insurance, claims resulting from terrorism are covered unless the insurer has explicitly excluded this coverage under the general terms and conditions of the insurance policy.

What about theft or looting after a riot or named peril?

Yes, we have insurers who will provide theft or looting coverage following a named peril. Additionally, we can cover damage caused by local police or authority during their efforts to control or suppress an event.

Does my travel insurance cover me with terrorism cover?

It is not mandatory for travel insurance policies to include cover for claims resulting from terrorism.

If your policy’s general terms and conditions do not include an explicit exclusion of terrorism, then you are indeed covered for terrorism.

Could some claims still be excluded under the terrorism cover?

Insurers can exclude injury or damage caused by nuclear weapons from their terrorism cover.

This must be explicitly listed as an exclusion under the policy’s general terms and conditions. Insurers can also list other exclusions, but only for insurance policies where cover for acts of terrorism is not mandatory.

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What's Covered?

Property

Most insurers have removed terrorism cover as standard from their commercial property policies.  However, as stated above, for member insurers, full cover is available via the Pool Re scheme.

Typically this applies to the following covers:

Commercial Property

Business Interruption

Contract Works

Book Debts

Computers

Engineering

The position in respect of terrorism exclusions applying to other covers, such as Money, Theft and Goods in Transit, is more variable between companies.

Legal Liabilities

Cover is provided by most companies for legal liabilities arising from an act of terrorism although there may be a lower limit than standard. 

For example, an Employer’s Liability claim may be restricted to £5,000,000 and Public Liability to £2,000,000.

Motor

Most commercial motor policies now limit cover for legal liability in respect of third party property damage caused due to an act of terrorism to £5,000,000 or the policy limit if smaller.

Making it Cheaper, By Doing it Right™

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Working With Us

Which Services will we Provide you with

The Business Insurance Bureau conducts both client and market research to identify solutions to the needs of an almost exclusively business clientele. We will make a recommendation once we have assessed your demands and needs.

Payment Terms

All premiums due to insurers must normally be paid by you on or before the date that cover commences. Where alternative methods of payment are available these will be discussed with you so that arrangements can be put in place by the due date.

Confidentiality & Security

We are registered with the Data Protection Registrar. We will ensure that any information obtained from you is treated by us and anyone else involved in arranging, considering to arrange or managing your insurance, as Strictly Private and Confidential. We will not provide your information to anyone else unless we:
have your permission to do so, or -are required to by the FCA, or -are required to do so by law, or -are required to do so in the normal course of arranging or negotiating and maintaining, or renewing financial services products which we may from time to time approve.We take appropriate steps to ensure the security of any money, documents, other property or information handled or held on your behalf.

All information in any form, with the exception of policy documents and certificates issued on behalf of insurers and supplied by us, to you, should be treated as Strictly Private and Confidential and not be released directly or indirectly to any other party, without our explicit consent.

Note: in transacting your insurances with The Business Insurance Bureau, you are deemed to have accepted our Terms of Business. Your accepting of these Terms of Business does not affect your statutory rights.

Claims

You must notify us as soon as possible of a claim and circumstances which may give rise to a claim. In the event of a claim you should contact this office and we will promptly advise you and if appropriate, issue you with a claim form and pass all details to your insurer. You should not admit liability or agree to any course of action, other than emergency measures carried out to minimise the loss, until you have an agreement from your insurer. We will remit claims payments to you as soon as possible after they have been received on your behalf. In the event that an insurer becomes insolvent or delays making settlement we do not accept liability for any unpaid amounts.

Cancellation Rights

You would have the right to cancel a policy within 14 days of its inception or upon receipt of the policy documentation whichever is the later. You would as a Consumer and without providing a reason, cancel the policy by confirming this is in writing to the address of our office through which your policy was placed. Any policy documentation and in particular any legal document, i.e. Certificate of Motor Insurance, Employers Liability Certificate, MUST be returned with your instruction to cancel. By exercising your right to cancel the policy, you are withdrawing from the contract of insurance.

Duration & Termination

Our services may be terminated without cause or penalty by giving one months’ notice in writing. In the event that our services are terminated by you other than at the expiry of the policy we will be entitled to retain any fees and all of the brokerage payable. The responsibility for handling claims reported after the date of termination shall in the absence of an express agreement be the responsibility of the party taking over the role.

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