UK nerve agent attack exposes insurance gap that needs rethink: Pool Re

The recent nerve agent attack in UK city Salisbury, which hospitalised three victims and closed parts of its shopping district for weeks, has exposed an insurance gap that needs to be addressed, according to UK terrorism reinsurer Pool Re. Chemical, biological, radiological and nuclear (CBRN) attacks are excluded from commercial property and business interruption insurance policies, but the head of Pool Re said the Salisbury attack is likely to instigate a rethink. “It was thought that the sheer magnitude of the potential losses would exceed the ability of insurance and reinsurance companies to meet claims,” said Julian Enoizi, chief executive of Pool Re. “The disturbing event in Salisbury shows that these types of attack can be localised and could be deployed by criminal or terrorist actors. They have highlighted the macro consequences of a micro CBRN event. This should prompt debate within our industry. Consideration should be given to whether the perceived wisdom around certain perils needs to be reassessed and whether now is the time to address other risks, for which underwriters also do not provide cover,” he added Pool Re said that while such an attack in the UK is unusual, it should be regarded as an emerging risk. Affected businesses in Salisbury will find their business interruption cover excludes chemical attack, unless declared a terrorist incident, it confirmed. Several businesses in Salisbury, and in particular two key sites identified as locations visited by nerve attack victims Sergei Skripal and his daughter Yulia, have been closed since the incident on 4 March. Pool Re said anecdotal evidence suggests Salisbury’s retail and tourism businesses have recorded a 40% to 50% reduction in footfall in the aftermath of the attack. One month after the attack, Salisbury Cathedral said its footfall was still down 20%. It is the first major CBRN poison attack in the UK since the murder of Alexander Litvinenko in 2006 via radiation poisoning. Pool Re said the Salisbury incident has seen how a small amount of nerve agent has impacted businesses. The investigation has spread to multiple locations, as well as compromising the health of victims and, potentially, the wider population. Pool Re, set up 25 years ago when traditional reinsurers withdrew from covering commercial properties at risk of IRA terror attacks, said the terrorist threat is continually shifting so it is adapting. From April, Pool Re included attacks that cause physical damage to property in its cover and legislation is also on the table to include terrorism acts that cause non-damage business interruption. In its latest terrorism frequency report, Pool Re said the threat from modern right-wing extremism has increased, with implications for the insurance market. “While extreme right-wing actors are unlikely to mount indiscriminate attacks against civilians, targeted attacks could still result in significant casualties, and the use of explosives would likely lead to property damage,” said Pool Re analyst Eden Stewart. Following the high number of terrorist attacks in 2017, the UK has not suffered a terrorist incident during the first quarter of 2018. But Pool Re said the threat level from international terrorism in the UK remains severe. “The motivation to undertake similar attacks to those seen in 2017 continues,” the report says. “Islamist extremist-inspired attacks targeting crowded places (using bladed weapons and vehicles) pose the greatest threat and, by default, are the hardest to interdict,” it adds.

UK nerve agent attack exposes insurance gap that needs rethink: Pool Re

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