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.
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)
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.
Request a Call From an Experienced Broker
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:
The position in respect of terrorism exclusions applying to other covers, such as Money, Theft and Goods in Transit, is more variable between companies.
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.
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