On October 11 this year, horror struck Manchester. A city still reeling from the Manchester Arena bombing that took the lives of 23 people and saw more than 800 injured, was suddenly thrust into the terrorism spotlight again as a man wielding a knife stabbed five people at the Arndale Centre – a building that was itself at the centre of a terrorist bombing carried out by the IRA back in 1996.
Thankfully, on this occasion, no lives were taken. The man was arrested initially on suspicion of terrorism and detained under the Mental Health Act.
Aside from the horrors of the day’s events, the incident also raised vital questions for the insurance industry – such as how much it can help with any potential claims.
“The problem with this situation is that we don’t know whether the act was terrorism related or not,” Geoff Stilwell, CEO and MD of Beech Underwriting told Insurance Business. “Determining that is vital to understanding whether terrorism cover or active assailant cover could help.”
Beech’s terrorism insurance product offers something called “non-damage denial of access cover,” something that Stilwell himself says he is “constantly shouting about.” That’s because it can offer vital help when businesses – anything from a restaurant, to a pub, to an entertainment centre – is unable to operate following a terrorist attack.
“That kicks in when you can’t trade,” he said. “Say there was a restaurant in the Arndale Centre in Manchester and the place was shut down for a couple of days after an incident related to a known terrorist – the non-damage denial of access policy would be invoked and that would cover running costs while they are unable to gain access. It can cover things like loss of business, turnover, wages, etc.”
However, if the incident were not deemed an act of terrorism then a different policy would be needed – something that Stilwell explains is currently much more popular in the US: active assailant cover.
“That covers situations like the shooting in Las Vegas,” he said. “The problem with the policies is that the numbers involved are fairly high. We do it, but it’s not currently popular and we are looking at finding ways to make it more price acceptable for the market.”
Stilwell explained that if there is a situation, for example, where someone goes into a school and shoots at a student or teacher, then active assailant cover could help with the liabilities the school faces.
“It is very complex and there are so many levels of what you can have or do – so a lot of it is tailor-made to the client,” he said. “But potentially active assailant coverage could cover legal liability, business interruption, loss of attraction, things like emergency security, forensic clean-up, medical expenses, funeral expenses, psychiatric care, temporary staff costs.”
Stilwell anticipates that as incidents like those at the Arndale Centre increase, active assailant cover will pick up momentum in the UK too.
“In the US active assailant coverages are being written multiple times a week,” he said, “but the problem is that it costs a lot of money – minimum premiums are in the $5,000 range. That doesn’t translate here, it’s a huge hole in the budget. So, we are working with underwriters to provide different tiers of cover – hopefully that will help give people the peace of mind they need.”