BIBA’s executive director has described a vote by UK motor insurers to mutualise the risks associated with terrorism claims as “absolutely the right thing to do.”
Motor Insurance Bureau (MIB) members have voted in the majority for the bureau to deal with all third-party motor claims where terrorists driving vehicles injure or kill people, it was revealed yesterday. The not-for-profit body will become responsible for dealing with claims that occur on or after January 01, 2019, and will directly handle compensation for victims of vehicle-related terrorist events.
BIBA’s Graeme Trudgill said that gaps in terrorism cover were highlighted in the association’s 2018 manifesto and BIBA had committed itself to helping the market find solutions.
“The use of a vehicle as a weapon is not what motor insurance is designed for and it would be wholly unfair, not to mention unsustainable, to hold a single motor insurer responsible for any subsequent compensation payments,” Trudgill said in a statement.
“I must say well done to the MIB and its members for bringing about this change so quickly,” he added.
More than 75% of motor insurers by voting rights agreed the change, following a 28-day ballot which closed on July 19. As a result, Article 75, the relevant element within MIB’s Articles of Association, has changed to reflect the new scope of the claims paid by the bureau.
The move follows a consultation earlier this year in which the MIB was asked to determine the level of support across the market for a change to be made so that the liability of the Article 75 insurer moved to the MIB.
Steve Maddock, chairman of the MIB and chief operating officer at Direct Line Group, said the motor insurance market had “clearly signalled” that it was right to consider if individual insurers or the market as a whole carry the risks associated with motor claims arising from terrorist attacks.
“The outcome of the vote indicates strong support to mutualise the risk and enable MIB to act in the event there are further terrorist activities,” he said. “It is a good outcome for the industry and the public and one which is supported by the Department of Transport.”
Dominic Clayden, chief executive at MIB, said those who are innocently caught up in events where terrorists drive vehicles into people to injure and kill, “can rely on MIB to pay and handle their motor related claims for these terrible events.”
The UK market will continue to fund the MIB through the current levy arrangement. MIB said it may explore the possibility of reinsuring some of the liability as a result of the move.