In June 2018, the government introduced the Counter-Terrorism and Border Security Bill. The Bill plugs a gap in UK terrorism insurance cover for commercial businesses.
Most terrorism insurance cover offered by commercial insurers is underpinned by a government-backed re-insurer, Pool Re, under a scheme put in place after the high-cost terrorist attacks in the City of London in the early 1990s.
Pool Re is currently restricted in that it can only pay out if an act of terrorism has resulted in physical damage to a property. Take the case of the June 2017 terrorist attack on Borough Market: there was very little physical damage to the market but traders and restaurant owners lost business as a result of the week-long closure of the market for police investigations. Terrorism insurance cover backed by Pool Re would not have covered such business interruption losses.
The new Bill seeks to plug this insurance gap by enabling Pool Re to extend its cover to include non-damage business interruption losses resulting from acts of terrorism.
The Bill has already had its second reading and we will keep you posted as to its progress.
Mindful of the range of terrorist threats facing businesses nowadays, Pool Re has already extended the cover it offers (with effect from April 2018) to include material damage and direct business interruption caused by cyber terrorism.