BASED on original research by the Cambridge Centre for Risk Studies, the Lloyd’s of London City Risk Index for the period 2015 to 2025 has identified terrorism as a major threat to economic output.
It puts terrorism alongside other emerging risks, such as cyber crime and natural disasters, including flood and earthquake. According to the UK Government Joint Terrorism Analysis Centre, at the time of writing this article, the risk of terrorist attack is rated severe and, as was seen in the recent Westminster attack, highly likely. The risk for business is not just in the UK, it is global and must be a concern for those of us who travel abroad either on business or for leisure, or who have interests overseas.
In the UK, recent terrorist attacks have been limited to shootings and close quarter attacks on individuals. These have been centred on high profile and public places. However, emerging threats, such as the use of explosives and chemical, biological and radiological devices, and cyber-enabled terrorism should be regarded as a real threat to all of us.
Insurers regard terrorism as difficult to assess and insure and across all insurance classes, insurers tend to exclude or restrict the insurance cover they offer. For example, in many countries, insurance for damage to property and business interruption following a terrorist attack is only available with Government backing. This has been the case, with a limited number of exceptions, in the UK since the mid 1990s and was in response to the costs associated with the Provisional IRA’s mainland bombing campaign at the time. For other types of insurance, including liability, motor and specialist IT, there is not always a common approach taken by insurers.
One thing is for certain, it is a good time for business managers to consider insurance for terrorism and other emerging business risks. Even if not an intended target, your business might still be in the vicinity of an attack, or affected in some other way. Could the indirect consequences be significant? This should include consideration of prolonged business interruption and liability to employees and others.
The take-up rate for specific terrorism insurance has been low over the last two decades, particularly outside Central London and other major cities. Certainly the risk of loss and insurer pay outs have also been low. However, times are changing and uncertainty over future risks of loss should be considered. At the very least, business managers should review existing insurance policies and specifically the extent of cover for damage, business interruption or liability resulting from –
* Cyber and other attacks
* Supply chain issues
* Injury to employees and third parties
* Consequential loss, including denial of access from any cause, whether resulting from damage or not
* Terrorism affecting employees who travel outside the UK.
Whether you have insurance cover or not, it is prudent to review Business Continuity Planning, which should encompass your emergency recovery planning. If you do not have a formalised plan it is important that you have clear actions planned following a serious incident.
For more information or an informal discussion, contact Simon Mitchell, Account Director, Towergate Insurance Northampton on 01604 887325. Simon is a Chartered Insurance Broker with 30 years’ experience and a wide range of knowledge about insurance for business. This includes specialist advice about emerging risks such as cyber crime and terrorism.
Towergate Insurance is a trading name of Towergate Underwriting Group Limited. Registered in England Company No. 04043759, registered address Towergate House, Eclipse Park, Sittingbourne Road, Maidstone, Kent, ME14 3EN. Authorised and Regulated by the Financial Conduct Authority.