Denial of Access – Does your client have the protection they need?

There has been much activity across the market following the Supreme Courts ruling on the FCA’s business interruption test case earlier this month. Although not related to Terrorism Insurance it highlights a persistent market issue regarding clarity and certainty.

Many policyholders whose businesses were affected by the Coronavirus pandemic suffered significant losses, resulting in large numbers of claims under business interruption (BI) policies being submitted to brokers & insurers alike.

Most Commercial SME policies focused on property damage only having basic cover for BI as a consequence of property damage. However, some insurers extend BI from other causes, in particular infectious or notifiable diseases (‘disease clauses’) and prevention of access and public authority closures or restrictions (‘prevention of access clauses’). In some cases, insurers have accepted liability under these policies.  In other cases, insurers have disputed liability while policyholders considered that they had cover leading to widespread concern about the lack of clarity and certainty.

From the many conversations we have with brokers about Terrorism Insurance protection there continues to be uncertainty regarding the extent of cover provided. Especially when clients opt to protect through PoolRe subscribed insurers.

The recent terrorism events in the UK and around Europe show low complexity attacks using knives, small arms or vehicles has become common place.  The threat of terrorist action on UK shores has  been raised to ‘Severe’ by the Joint Terrorism Analysis Centre (JTAC) meaning attacks are highly likely.

The modus operandi for the modern terrorist is to create fear and panic. Economic damage is not the primary objective which the traditional insurance response was built for. Contemporary protection must include Non Damage protection if considering mitigating the financial impact by purchasing Terrorism Insurance.

Subscribed Pool Re members can, with relevant agreements, cede Non Damage BI to Pool Re and offer the extension to cover, as long as the client’s underlying commercial insurance policies reflect this. Unfortunately, due to COVID 19 many Insurers have reviewed, restricted or removed ‘prevention of access’ clauses from their business interruption section meaning even if covered was arranged it may now not activate.

This all culminates in yet greater burden of responsibility weighing on the broker. The devil is always in the detail so we recommend reading the small print when offering PoolRe protection.

Inperio Terrrorism & Sabotage policies come with clear and unambiguous Non Damage BI protection as standard. Give your client’s the choice so they can make an informed decision.