NU Online News Service, Aug. 9, 3:09 p.m. EST
The Association of British Insurers (ABI) says insurers are expecting “significant losses” of more than 100 million pounds ($162 million) from damages caused by rioting in boroughs of London and other cities.
ABI spokesman Nick Starling says it is “too early for us to have an accurate picture of total costs, especially business-interruption costs,” but insurers are expecting home and commercial insurance claims as youth in the United Kingdom continue to loot businesses and commit arson as they have since Aug. 6.
The Metropolitan Police Service says more than 560 arrests have been made as “unprecedented violence” is directed at officers. The MPS says officers have been attacked with bricks, bottles and wood. Some have even been hit by cars.
“But this is not just about my officers who continue to do their very best,” says Steve Kavanagh, deputy assistant commissioner of the MPS, in a running online update of the situation. “This is also about the damage these thugs are doing to our neighborhoods. Local shops and businesses have been ruined; householders have been left homeless and great damage done to our local services and infrastructure.”
ABI says home insurance should cover fire, looting and damages. Many policies also provide payments if homeowners cannot stay in their home.
Most commercial policies will cover damages and business interruption caused by fire, looting and other damages and some policies will cover interruption to businesses that were not directly damaged by the riots.
According to police, looters have targeted banks, department stores, electronic stores, shoe apparel and liquor stores.
The British Insurance Brokers' Association urges those affected by the riots to contact their insurance broker as soon as possible.
The financial impact on insurers will be small, but there may be some increase in premium for the worst-affected areas, according to a note from PricewaterhouseCoopers (PwC).
“The key issue is how quickly insurers can deal with claims, as many small businesses may not have the cash flow to survive without quick payments and more will not have business interruption insurance,” says Mohammad Khan, partner at PwC.
The riots began after Mark Duggan, a 29-year-old Tottenham resident, was shot to death by police last week. However, catastrophe modeler Risk Management Solutions says the riots appear “to have little unifying cause other than the desire to cause damage or to steal.”
In a strange twist, according to a British law from the 1880s, the police are required to compensate individuals and organizations who suffer loss or damages from a riot—regardless of whether they are insured.
Insurers can also make a riot compensation claim for the amount of claims paid to policyholders who suffered riot-related losses and damages, says the ABI.
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