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“It won’t happen to me.”
Those are the words that brokers attempting to sell terrorism insurance to their clients hear only too often. It’s an understandable sentiment too when you look at the recent string of terrorist attacks in the UK – the bulk of which have been focused on central London locations like Westminster and Borough Market. However, sadly, terrorism knows no borders.
“Trying to convince a client to buy terrorism insurance can be a difficult sell,” explained Geoff Stilwell, MD of Beech Underwriting, a terrorism insurance specialist, speaking to Insurance Business. “It will often be that the client feels that it is not needed, i.e. they are low risk.
“The answer is of course that sadly the people that carry out these attacks don’t just target high risk locations. It can be anywhere as has been discovered over the years.”
Indeed, while London may be the centre of terrorist action in the UK, it is certainly not the only target point as last year’s horrific Manchester Arena bombing served to emphasise. In recent years there have also been the murder of MP Jo Cox, in West Yorkshire, which was declared an act of terrorism; the New Irish Republican Army sending parcel bombs to locations in Oxford, Brighton, Slough, Aldershot, Canterbury, Reading and Chatham in 2014; and terror-motivated murders in Birmingham.
However, according to Stilwell, the main issue is not so much these ultimate acts of extremism and the idea that you could fall victim to them – but more that a business could be severely disrupted if a terrorist act takes place nearby, as could the lives of anyone living within the vicinity.
“The main point that should be made to the client is that if they have a mortgage or loan secured on a building or the business then they should buy terrorism cover,” he said. “Clients have to understand that the bank or lender are still going to want the loan or loans repaid whether or not the building or business is still standing. Even standard household policies don’t always include terrorism cover - so again the same principle applies - if you have a mortgage or loan secured then it should be insured.”
To emphasise the point, Stilwell reminds brokers of a well-documented legal case that might help get across the message of the cover’s importance to clients.
“There is also a legal case relating to a block of flats called Qdine Ltd v (1) Bath Building (Swindon) Management Company Ltd & two various leaseholders which took place in 2014,” he explained. “Effectively this was a case where there was a requirement within the mortgage conditions to insure for fire, perils and explosion and while terrorism was not specified, the word ‘explosion’ should be given its ordinary meaning and that would include explosions by terrorist activity.
“The Upper Tribunal (Lands Chambers) held in favour that the meaning of the word ‘explosion’ included explosions caused by terrorism. On the basis of that judgement those responsible for the management of the insurance of a block of flats should consider the requirement - terrorism cover should be bought.”
