Acts of terrorism are rarely out of the news, serving as a stark reminder that political violence remains a persistent and significant threat to businesses, governments and individuals. Craig Curtiss, Class Underwriter for International General Insurance (IGI)’s Political Violence division explains how his team are adapting to the evolving nature of terrorism risks.
What does the risk landscape look like today?
A continuous momentum of global terrorist events over recent years has sparked plenty of market commentary about how the nature of political violence risk has evolved and changed the risk landscape.
New threats have emerged globally, in the form of so-called ‘lone-wolf’ attacks such as the one carried out by a suspected white extremist gunman on two mosques in Christchurch, New Zealand, in March which resulted in 50 deaths. In London, we have seen extremists drive vehicles into crowds of people in an attempt to maximise the carnage.
Meanwhile, a series of bomb scares across the UK in March this year saw the police link an explosive device found in Glasgow with suspicious packages mailed to Heathrow Airport, Waterloo station in London and London City airport. The discoveries reminded those in the market that the use of explosives was still a very real threat.
As a result, the Counter Terrorism and Border Security Act 2019 brought into law in the UK on 12 February changes that allow Pool Re, the UK’s state-backed terrorism reinsurer, to offer new policies to businesses that include ‘losses from a terror attack that are not contingent on damage to commercial property’, including business interruption.
What has not changed in the increasingly unstable world of terrorism, is that a robust insurance policy can give clients the peace of mind to conduct business with confidence. Our job as insurers has always been to make sure people can get back on their feet following any terror-related attack, and to get society running smoothly again.
How has IGI evolved it products to adapt to both the changing legislative environment and nature of terrorism risks?
While UK legislation took a while to move away from a strict definition of a terrorist event and cover non-damage business interruption, IGI was ahead of the game. IGI realised that all forms of terrorist attack needed to be covered – with no grey areas. We launched our Denial of Access product in November 2017 to protect against financial loss when a business cannot carry out some or all of its commercial activities following a terrorist incident.
Denial of Access coverage falls within the remit of a business interruption policy, which protects against financial loss when the insured cannot carry out some or all of its business activities as per usual. Traditionally, a business interruption policy - or specifically Denial of Access coverage - has a physical damage trigger, which means an insurance policy will only cover any interruption to a business as a result of it suffering physical damage, but our policy covers those incidents without the need for a physical damage trigger.
We launched this product as a direct response to the attacks near London Bridge in June 2017. A white rental van was driven into pedestrians on London Bridge, before the van continued to Borough Market, where three attackers emerged and carried out multiple stabbings in Borough Market’s pubs and restaurants, killing seven people in total. As a result, Borough Market shut down for 18 days and local businesses lost £1.4 million in revenue.
How can brokers help?
The British Insurance Brokers’ Association (BIBA) has estimated that fewer than 3% of SMEs buy any sort of terrorism cover. That figure is alarmingly low, and brokers can help change that statistic.
Now that Pool Re has extended its scheme, Denial of Access cover has become more widespread and easier for more small businesses to be protected. However, it is important to remember that there are alternatives in the commercial market available to brokers and clients outside of the Pool Re programme.
The main aim moving forward is to make clients increasingly aware that there are credible alternatives to Pool Re for non-damage Denial of Access business interruption.
What else can IGI offer?
Denial of Access and the extension of Pool Re’s remit may have taken up a lot of the news headlines over the past year, but the demand for traditional Political Violence policies that cover physical damage and business interruption are still in demand.
IGI’s political violence underwriters in London & Dubai provide political violence coverage on a worldwide basis, and the team is adept at creating flexible solutions that are tailor-made to suit businesses of all sizes.
As well as our underwriting strength and wide geographical spread, our prompt settlement of claims means our clients and broker partners can be assured of excellent levels of service.