Insurance against terror attacks must adapt to face up to the threats posed by so-called lone-wolf militants and the rise of cyber crime.
That’s the view of Julian Enoizi of Pool Reinsurance, the UK government-linked body that backstops insurers against terror payouts.
The spate of recent attacks in London and the suicide bombing of a Manchester pop concert in May highlighted shortcomings in coverage, he said. “We need to close gaps such as business interruption that’s not the result of physical damage and coverage of cyber terror as well as the low take-up among businesses outside of London,” the Pool Re chief said.
Vehicle attacks on Westminster Bridge in March and London Bridge three months later highlighted how the industry “should address the issue that motor insurance provides unlimited cover,” potentially leaving insurers liable for massive payouts, he said. Pool Re was formed as a venture between the industry and government in 1993 after the bombings in London by the IRA.
The company has met more than £600m (€670.6m) of claims, the largest being its £262m payout for the IRA bombing of Bishopsgate in London.
Two-and-a-half decades later, the attacks of 2017 have shown the need for Pool Re to start covering so-called non-damage business interruption, Mr Enoizi said.
Broadening cover would mean higher reinsurance premiums for Pool Re’s members, which include the local units of every major non-life insurer from Allianz and Aviva to Zurich.
He expects the largest claims this year to result from damage to the Manchester concert hall and interrupted business due to the closing of the nearby train station.
“The Westminster, Manchester and London Bridge attacks all resulted in claims for Pool Re,” Mr Enoizi said. “It’s still too early to tell how large these will be. We are still receiving claims.”
Pool Re’s support means it would take a terror attack exceeding £10bn before the capacity of the UK industry was exhausted, Mr Enoizi said. Still, that’s less than a third of the $43.6bn (€77.4bn) insured loss from the September 11, 2001 attacks — the costliest terror-insurance claim in history.
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