The Association of British Insurers has called for an overhaul in the law that provides for compensation to be paid to the victims of riots.
In its review of the financial costs of last August’s riots, ‘£40 million a Day. Counting the Financial Cost of the August 2011 Riots’ published today (22 May), the ABI highlights that:
– Insurers reacted quickly to the riots and expect to pay out £200 million to customers in respect of damage to homes, businesses, vehicles and business interruption losses.
– Have fully settled or made interim payments on 95% of claims from householders; 92% of claims from small and medium 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 or under-insured who suffer riot damage, must be updated to speed up and simplify the process of paying compensation.
Nick Starling, ABI’s Director of General Insurance, said:
“Insurers reacted quickly to help thousands of customers recover from last August’s devastating riots. The priority was ensuring that customers could get back in 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”.
The ABI’s report also 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, the ABI added in its statement.
Also, the lack of a uniform and consistent approach has led to victims in some areas affected being treated differently to those in another.
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 should be extended from 14 to 90 days so that those who suffered property damage have enough time to claim, especially as in some cases there may be a delay in being able to access their property to assess the damage.
Nick Starling stressed that:
“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 out-dated Act means the process is too slow, too bureaucratic and leaves too many people unable to get on with their lives.”