Mark Shepherd, Manager, General Insurance, ABIThis weekend marks an infamous anniversary. Five years ago, between 6 -10 August 2011, riots, looting and violence rocked cities and towns across England. Five people lost their lives.
An estimated 13,000-15,000 rioters committed more than 5,000 crimes, including 1,860 incidents of arson and criminal damage. Insurers responded quickly to help business and home owners whose properties had been damaged and have since paid out around £170million.
The August 2011 riots highlighted the existence of an obscure piece of legislation that has proved key in helping riot victims recover. The Riot (Damages) Act 1886, while 125 years old, allowed those without insurance who suffered riot damage to claim compensation from the police. By also allowing insurers to recover what they have paid out in riot damage claims in certain circumstance, the Act also ensured that riot cover has remained a standard part of property insurance.
However, unsurprisingly, given that it dated from Victorian times, the Act was in urgent need of modernisation. The costly damage also led to calls from some quarters that this protection from the State should be repealed or significantly watered down, which could have meant those suffering from riot damage in the future would have no route to compensation, leading to economic and social stagnation in some of the most vulnerable city areas.
The new Riots Compensation Act received Royal assent in March this year. The ABI has been at the forefront of ensuring the legislation is fit for purpose and that the claims process works much better for riot victims. The new Act retains insurers ability to recover certain riot damage costs from the State, preserving competitively priced riot damage cover in property insurance policies.
An important change the ABI lobbied strongly for was to shift the Government’s original proposal of limiting the legislation to apply to businesses with a turnover of less than £2 million, to a £1 million limit on the value of the claim regardless of the turnover of the business. This change meant that if the new Act was applied to the August 2011 riots, it would have covered 99% of business property damage claims rather than just 33%.
What is and what is not defined as a riot is down to Police and Crime Commissioners to decide, but they now have a much clearer definition in legislation to guide them. Ensuring speedy and consistent decisions in accordance with the legislation is clearly vital in helping future riot victims get the compensation they are entitled to. As is a claims process that works well for the uninsured, which is why insurers and loss adjusters are committed to offering their expertise to a Riot Claims Bureau, which would help the Government and the police better manage uninsured claims under the terms of the new Act.
While riots are rare, the risk of large scale civil disturbances remains. Five years on, what has changed is that we now have in place clear legislation on compensation that reflects the needs and demands of today, not those of a time when Queen Victoria was on the throne.
Mark Shepherd is Manager, General Insurance at the Association of British Insurers ABI