UK buyers need to review terrorism liability limits ahead of new Protect Duty

UK companies may need to purchase higher terrorism liability limits following the proposed Protect Duty legislation that is set to radically change how companies manage terrorism risks. The Protect Duty, also known as Martyn's Law, comes in the wake of a number of terrorist attacks in public spaces across the UK. This includes the 2017 Manchester Arena bombing in which Martyn Hett lost his life along with 22 others, including many children. There was a consultation on the proposed legislation earlier this year and it was included in the Queen’s Speech. The duty, as outlined in the consultation, would require owners and/or operators of publicly accessible locations (PALs) to take appropriate and proportionate measures to protect the public from terrorist attack. While detailed requirements have yet to be hammered out, the Home Office estimates that 650,000 UK businesses could be affected by the new duty. The Protect Duty will “fundamentally change” the way businesses think about and prepare for acts of terrorism, according to Rosanne McNeil, solicitor at law firm BLM. Under the current proposal, the duty would apply to public venues with a capacity exceeding 100, large organisations employing more than 250 people and public spaces, she noted. “The legislation will create a new statutory duty on those who own, occupy or exercise control over publicly accessible locations and organisations to assess the risk of terror attacks, implement measures to reduce the risk, and put together robust terrorism plans,” explained McNeil. “For larger business and organisations that already consider themselves potential targets for terrorist attacks, the Protect Duty may simply formalise the approach already taken. However, for smaller organisations that would not be regarded as obvious targets for terrorists attacks, this is likely to be completely new territory,” she said. Businesses that fail to carry out requirements under the duty could face civil liability, explained Alistair Kinley, director of policy and government affairs at BLM. “The duty will lead to greater exposure for businesses in scope and they’ll need to take an informed decision about risk transfer via liability insurance or specialist terrorism covers,” he said. “Board members also need to be aware of the Protect Duty and to start a dialogue with D&O providers before the duty bites. Consultants and specialist companies carrying out ‘protect’ risk assessments and designing mitigation programmes will need to review their professional negligence covers,” added Kinley, who took part in a Protect Duty workshop at the Airmic conference in Liverpool. The Manchester Arena Inquiry showed that some organisations need to think about how they prepare for acts of terrorism, according to the UK’s property terrorism reinsurer Pool Re. “The Protect Duty is a very positive step for the civil resilience agenda. But the limits that many publicly accessible locations currently buy, for public liability or employers’ liability, will probably be very limited when it comes to terrorism. If you had an event similar to the Manchester Arena attack that led to a number of deaths, it is likely the limits many policyholders buy would barely cover their legal fees,” said Tom Clementi, chief executive of Pool Re. But he believes the Protect Duty could drive demand for higher terrorism public liability and employers liability limits. “That raises the question of how much capacity and appetite the private market has to respond to that demand. It is not inconceivable that there is a role for Pool Re here if there is a market failure. But we will have to wait and see,” he told Commercial Risk Europe. Steve Coates, chief underwriting officer at Pool Re, added: “If you are an employer with a £5m limit for employers’ liability, you need a conversation with your broker about whether £5m can ever be enough when you have more than a handful of employees. The answer is of course that it isn’t. As soon as the duty comes in, brokers will need to start having conversations with clients around how much terrorism liability cover they need.” Kinley said businesses should review insurance programmes with the Protect Duty in mind. “Even though it may not be implemented in full until late 2023/early 2024, the direction of travel from the Home Office and the Manchester Arena Inquiry is very clear. The best advice must be to start those reviews now and establish an informed position on terrorism risk, proportionate mitigation measures and appropriate insurance solutions,” he said.

UK buyers need to review terrorism liability limits ahead of new Protect Duty

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