In its review of the financial costs of last August’s riots, published within a report entitled: ‘ GB pound 40 million a Day: Counting the Financial Cost of the August 2011 Riots’, the Association of British Insurers (ABI) highlights that insurers reacted quickly to the riots and expect to pay out GB pound 200 million to customers in respect of damage to homes, businesses, vehicles and business interruption losses.
In addition, insurers have fully settled – or made interim payments – on 95% of claims from householders, 92% of claims from small and medium-sized businesses and 75% of large commercial claims. Complex cases from large companies, often involving multiple sites, is the main reason for the small number of claims awaiting final settlement.
The Riot (Damages) Act 1886, which provides compensation to those without insurance, who are under-insured or who suffer riot damage, must be updated to speed up and simplify the process of paying compensation.
Nick Starling, the ABI’s director of general insurance, commented: “Insurers reacted quickly to help thousands of customers recover from last August’s devastating riots. The priority was ensuring that customers could get back to their homes and that businesses could resume trading as soon as possible. Insurers are doing everything possible to fully settle the handful of outstanding claims, including making interim payments to help customers recover.”
As stataed, the ABI’s report highlights that the Riot (Damages) Act 1886, which enables compensation to be paid by police authorities to victims who suffer loss or damage following a riot, needs to be reviewed and updated “to reflect modern society”.
While the intention of the 126 year-old Act remains relevant, the current arrangements have led to delays in paying out some compensation to people without insurance.
Lack of a uniform and consistent approach
The lack of a uniform and consistent approach has led to victims in some areas affected being treated differently to those elsewhere.
Insurers are also able to claim under the Act for payments they have made to policyholders. The existence of the Act ensures that insurance cover for riots remains widely available and affordable. However, recent Government figures suggest that over half of claims from insurers have been rejected under the Act.
The ABI wants to see:
- a uniform definition of what constitutes a ‘riot’ which is accepted by all police authorities
- a streamlined and standardised claims process for police authorities: the lack of such an approach has led to delays and confusion for victims as to what information they need to provide
- the time period for claims to be made extended from 14 to 90 days so that those who suffered property damage have enough time to claim (particularly given the fact that, in some cases, there may be a delay in being able to access property and assess any damage)
Nick Starling stressed: “The Government must review and update the Act to ensure it reflects the needs of today’s society. We need to make sure that compensating riot victims is the priority, but the outdated Act means the process is too slow, too bureaucratic and leaves far too many people in a position where they’re unable to get on with their lives.”