Whether you are renting your home or looking to buy, there are so many things you need to take into consideration. One of the most important things to arrange quickly is insurance. There many types of insurance based on what exactly you need and the level of cover you require. For example, those purchasing their home will need not only contents but building insurance too. Whereas renters may only need contents insurance. However, those living in a block of flats may need extra protection.
One type of protection it may be worth looking into is Terrorism Insurance.
Definition of Terrorism.
The Reinsurance (Acts of Terrorism) Act 1993 defines terrorism as “acts of persons acting on behalf of, or in connection with, any organisation which carries out activities directed towards the overthrowing or influencing, by force or violence, of Her Majesty’s government in the United Kingdom or any other government de jure or de facto.”
Is Terrorism Insurance Optional?
Yes, in a nutshell, this type of insurance is always optional, however, it is definitely worth considering, specifically for those living in blocks of flats. It may not seem like this is something that could happen to you so it is tempting to chalk this up as just another expense.
Here are a few things to think about:
- The lease may make it a requirement. Older, pre-1990s leases may not mention it specifically, but if there is generally a requirement for full or comprehensive property insurance they could expect it to be covered. The obligation to have comprehensive cover could, by definition, mean protection from the risks of an explosion caused by terrorists. This is a matter that has been tested in law in what is known as the Q-Dime case.
- Individual leaseholders’ mortgages, as lenders may insist on it.
- The building may not be a target but individual residents could be threatened and at risk; even worse they could be terrorists themselves. Bomb factories in blocks of flats are not unknown.
So if we have to have it, why is this cover not included as standard?
There is a long history in England and Wales of Terrorism with the biggest economic loss in the EU coming from the UK between 2004 and 2016. New data is showing attacks are costing the country an estimated £38.3bn in GDP growth during that period.
The losses involved in these attacks can be massive so special arrangements have been made for commercial properties so that high-value claims can be met. It is worth noting that this relevant to blocks of flats as while normal household insurance will cover terrorism, a block of flats are treated as a commercial risk meaning the terrorism cover is automatically excluded and will need to be covered separately.
Older generations will remember the seemingly never-ending IRA campaign of the 1970’s. The IRA bombing of the Baltic Exchange in 1992 was what precipitated the changes in the insurance market as massive losses were being incurred and the industry needed to ensure it could meet its obligations.
What is Pool Re?
The answer that insurers and Lloyd’s Syndicates found was to set up the Pool Reinsurance Company Limited, also known as Pool Re, to share the risks. Membership of the scheme gives them the support to help cover losses resulting from acts of terrorism, regardless of the scale of the claims. Without a set-up like this, many buildings would be unable to get insurance against losses caused by a terrorist attack. If insurers were unable to meet their obligations due to large losses, they would draw funds from the UK Government.
Deacon Insurance offers a choice of competitive policies; one of which offers broader cover to include attacks on individuals in the block if, say, you have prominent figures living in the block for example. Individual needs can be discussed and cater for on a case by case basis. There is no extra administration for you as the insurers require only the Statement of Facts for the Blocks of Flats policy, which we already hold for existing customers.
Even though you may have read that insurers often pay smaller claims themselves due to the way payments to the reinsurer are structured, and think any claim you make is unlikely to reach the threshold at which Pool Re pays out, you could still need specialist cover in place. Otherwise, damage resulting from explosions caused by terrorism may not be covered at all.
History of terrorism
The term terrorist is believed to have originated during the Reign of Terror (September 5, 1793 – July 28, 1794) in France. It was a period of eleven months during the French Revolution when the ruling Jacobins employed violence, including mass executions by guillotine, in order to intimidate the regime’s enemies and compel obedience to the state.
Some people cite the Gunpowder Plot of 1605 as the first attempt at a terrorist attack. Or do the roots of terrorism date all the way back to the 1st century and the Sicarii Zealots, Jews who opposed the Roman occupation of Judea. Or was it the 11th century and the Al-Hashshashin, the Islamic sect from whose name the word assassin comes, or maybe it was the 19th century and the Irish Fenian Brotherhood and Russian Narodnaya Volya?
Who Protects us?
Counter-Terrorism Policing is now an alliance of UK police forces working closely with security and intelligence agencies to prevent, deter and investigate terrorist activity. It is accountable to the National Police Chiefs’ Council (NPCC) Counter Terrorism Coordination Committee (CTCC) and works to protect the public and national security.
In 1883 the first police unit to combat terrorism was set up by the Metropolitan Police. At first, it was a small section of the Criminal Investigation Department originally known as the Special Irish Branch. The unit’s name was changed to Special Branch as its remit steadily widened over the years. The beginning of the 21st century, saw it merge with Scotland Yard. Today, heading up the counter-terrorism branch is considered to be the toughest job in British policing
At the end of the Second World War, there were a total of 17 MI (Military Intelligence) sections in the War Office. Today, just three organisations make up the British secret services.
- Began life as Secret Service Bureau in 1909
- Countered Imperial Germany’s espionage operations in the build-up to the First World War.
- During World War II, MI5 had success uncovering enemy agents and feeding misinformation to the enemy.
- Since the fall of the Iron Curtain, MI5 has been predominantly concerned with Northern Ireland and international terrorism.
- Responsible for countering covertly organised threats to the UK.
- The principal activity is to fight both international and homegrown terrorism.
- Known as the Secret Intelligence Service
- Operates worldwide.
- Deals with challenges such as regional instability, terrorism, the proliferation of weapons of mass destruction and illegal narcotics.
- Head of MI6 is known ‘C’ after its first chief, Sir Mansfield Cummings.
- Government Communications Headquarters’
- Eavesdrops on communications throughout the world
- The most secretive of all the agencies
- Headquarters are in Cheltenham, Gloucestershire.
- Cracking the Enigma code in 1940 possibly prevented the collapse of British resistance due to starvation, as German U-Boats were decimating Atlantic convoys.
- Another major wartime achievement was the design, installation and operation of the world’s first electronic computer, COLOSSUS.
The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.