British insurers face a bill of “well over” 100 million pounds ($162 million) after three nights of rioting destroyed vehicles, homes and businesses in at least six London boroughs and three other cities.
“Most commercial insurance policies will cover businesses for damage to their premises,” Nick Starling, director of general insurance at the Association of British Insurers, said in an e-mailed statement. “Some policies will also cover those businesses which are not damaged, but whose trade is affected.”
Shop and homeowners in the London boroughs of Lambeth, Hackney, Lewisham, Newham, Tower Hamlets and Croydon, as well as the cities of Liverpool, Birmingham and Bristol were among those surveying the damage caused by rioting today. The trouble began after Mark Duggan, a 29-year-old Tottenham resident, was shot dead by police last week.
“Last night was the worst the MPS has seen in current memory for unacceptable levels of widespread looting, fires and disorder,” the Metropolitan Police Service said in a statement.
At least 44 police officers have been injured, 525 people arrested and 99 charged with a range of criminal acts, following the fighting and looting. Police will have 16,000 officers on duty tonight, more than double last night’s total, as the force said it was prepared for “mass disorder again.”
The violence is the worst since at least 1985, when riots erupted in Tottenham, north of the River Thames, and Brixton, to the south.
‘Claims Coming In’
“It is too early for us to have an accurate picture of total costs, especially business interruption costs, but insurers are working hard to deal with claims coming in,” Starling said. Home insurance policies should cover customers for fire, looting and damage to property, he said.
Aviva Plc, Allianz SE, Axa SA, RSA Insurance Group Plc and Zurich Financial Services AG are the U.K.’s five biggest commercial property insurers, according to the ABI. Typically policies cover fire and damage to property, said Bill Gloyn, a real estate insurance broker at Jardine Lloyd Thompson Group Plc.
“Almost all commercial property is insured on an all-risk basis, so it doesn’t matter one way or the other what the cause of the damage was,” he said.
Smaller business may not be covered for looting as often insurers ask them to pay extra for theft insurance, according to Gloyn. Insurers may also question how well protected unoccupied properties were during the riots, he said.
Uninsured business and homeowners may also be able to claim for damages from the police if the events of the last three days are classed as a riot under the Riot (Damages) Act of 1886. Insurers may also be able to recover money under the legislation, the ABI said.
“A claim must be made to the police force within 14 days, so it is important that all business owners act promptly,” according to Daniel Barnett, a barrister at Outer Temple Chambers in London.
Even so, the damage will probably push up insurance rates in affected areas and insurers may require businesses to add extra defenses such as metal shutters, JLT’s Gloyn said. Premium rates for commercial property insurance have fallen by about a third in the last 10 years due to stiff competition between insurers, he said.
The British Retail Consortium, which represents retailers, called for banks to ensure credit arrangements allow businesses to repair their property and re-open and for insurers to keep premiums at “affordable” levels.
“I’m reassured that many people have expressed their disgust at the events of the past few days,” Stephen Robertson, director general of the BRC, said in an e-mailed statement. “I hope they’ll join retailers in doing all they can to rebuild their neighborhoods.”