Riot insurance - don't count on it
Proposed reforms to the way claims are paid out could wipe out businesses and homeowners financially, according to some insurers.
Following the rioting of Summer 2011, where disaffected youths rose up and acquired free rice and sportswear, around £167 million has been believed to have been paid out to people and companies who were affected by it, according to the Association of British Insurers (ABI).
However the ABI say that plans to overhaul the 128-year-old Riot Damages Act could threaten insurers' ability to cover such damage in England and Wales as a standard part of property insurance.
It said the proposals could reduce access to insurance and potentially lead to new excesses for riots having to be built into some policies and riots having to be excluded completely from cover in certain areas.
The ABI estimates that for every £10 paid out in compensation after the 2011 rioting, only £1 would be paid out under the reformed Act, which whatever way you look at it, is a bit shit.
It also warned that proposals to put new curbs on the Act would leave "all but the smallest firms unable to claim compensation", while car owners could find that the vast majority of vehicle damage is also excluded.
The ABI said that a proposal to limit those businesses who can make a claim to the police under the Act to those with an annual turnover of less than £2 million would leave all but the smallest firms unable to claim. Firms with a turnover of less than £2 million made up only 9% of the total value of commercial property material damage claims in the 2011 riots.
It also said that proposals to only include third party motor policies within claims to the police under the Act would leave a vast majority of motorists outside it. Around 96% of motorists have comprehensive cover rather than third party.
The ABI also shaded the idea that police and crime commissioners to decide whether a riot is actually a riot, and not just 'lots of people running about smashing stuff up and burning things' would also create potential conflicts of interest as the police are liable for riot damage.
There's a guy named Huw Evans, who is director of policy and deputy director general at the ABI, and he has said this: "Government proposals to drastically cut back compensation are at odds with its intention to retain the principle that the state is responsible for the costs of riot damage, that has proved its worth for taxpayers for over 100 years."
"Not only does the Act provide important protection for the uninsured, it means insurers can cover riot damage in England and Wales as a standard part of property insurance."
"Both would be in jeopardy under Government's new proposals, which instead need to reflect today's world and the needs of modern businesses."
"Insurers want to continue to offer riot cover as a standard part of property insurance, but such drastic change could significantly impact on premiums, lead to the incorporation of excesses for riot into business insurance policies, or the exclusion of riot from insurance cover in certain areas."
Meanwhile, a Home Office spokeswoman piped up with: "Small and medium-sized businesses are at the heart of their communities and it is right that the Government supports them when they suffer unexpected loss or damages.
"The Riot Damages Act is over 125 years old and needs updating. Its purpose is to provide a safety net for businesses and individuals - our recent consultation provided an opportunity to ensure it meets the needs of any future compensation claims.
"Interested parties, including the Association of British Insurers, were invited to comment and provide data to inform the consultation.
"No final decisions have been taken on changes to the Act. We will now consider responses to the consultation and will decide which proposals to take forward in due course."
What a mess, eh reader?