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Do entire towns need terrorism insurance?

Do entire towns need terrorism insurance? | Insurance Business

Do entire towns need terrorism insurance?

Recently, one small council in Norfolk made headlines for its decision to take out terrorism insurance for the entire town.

Why, residents asked, did a town of only 24,000 people on the road between Norwich and London need insurance to protect from a terrorist attack?

But the council of Thetford voted and deemed it necessary to have the cover, after obtaining a quote of over £1,500 to cover the town’s £12 million of assets.

CEO and managing director of Beech Underwriting, Geoff Stilwell, said that he was surprised when he heard about the story hitting the news—but not for reasons you might think.

Stilwell was surprised that the story had made headlines at all, since the terrorism insurance expert said that councils taking out insurance for their towns was a common occurrence.

“The majority of councils in the UK already have terrorism cover and there are special schemes for them,” he explained. “We certainty offer terrorism cover for councils.

“We already insure a number of councils for this. So, this isn’t the first - I don’t know why it’s hit the press. We’ve been doing it for years.”

In fact, Stilwell said that he was surprised that Thetford had only got terrorism insurance now. The CEO said that most larger councils have had this cover for many years. 

“It’s their assets, and they should be protecting it,” Stilwell explained. “Maybe they didn’t think they needed it up to now. Thetford is not a particularly big council if they’ve only got £12 million in assets, when you look at somewhere like Newcastle that’s into the billions.”

Stilwell said that Beech often gets calls from people who are offered to purchase terrorism insurance for their homes through their housing association, and they call his company adamant they do not want to purchase it.

“We do get phone calls from people who live in apartment blocks and they say ‘we don’t want to buy it,’” he said. “And we say ‘OK, the problem is - can you afford to lose?’”

Stilwell points out that while some of the residents of Thetford may disagree with spending £1,500 on terrorism insurance, ultimately what they are spending it on is an investment against risk.

“For the price they pay, if they’ve got £12 million of assets it would be foolish of them not to have contingency cover in the event of there being an incident,” Stilwell said.

And as the CEO asks, would those residents of a small town prefer to have to come up with the money another way if something were to happen?

“It all boils down to, can you afford to lose £12 million of assets?” Stilwell asked. “And the answer is ‘no you can’t’. Because if there was an incident and they lost a £5 million building in an act of terrorism then the residents of Thetford are going to have to pay for it.

“Or they’re going to have to get a bank loan, because it’s going to have to be funded somehow and, at the end of the day, it’s going to come back to the residents to pay for it. Now do they want to pay for it themselves or do they want someone else to pick up the bill?”

In the end, Stilwell said that most councils already have terrorism insurance, but for those that don’t, he would recommend it.

“It’s just prudent accounting,” he said. “I’d recommend it to any council. If anyone says ‘oh it won’t happen to me’, well, I’ve got news for you: it does.”