Interviews

Insurance and terrorism

by Mark Rowe

Terrorism and violent extremism are a continuous and sustained threat to the UK and beyond, writes Spike Townsend, pictured, who considers insurance, terrorism risk management and Loss Mitigation Credit (LMC).

In recent years this threat has evolved with new attack methodologies and ideology, directly tasked or inspired that has led to an increase in both the scale and intensity of atrocities. The indiscriminate nature of the contemporary terrorist threat, its pace, ferocity and scale of multiple co-ordinated attacks has and continues to be a significant challenge for all those operating within the terrorism landscape, whether commercial or public. The threat vector to the UK is very real, evolving and difficult to counter in isolation without well thought out, proportionate and cost effective initiatives to encourage dialogue and counter terrorism (CT) protective security improvement activity. Whilst the Government counter terrorism strategy requires UK CT Policing to undertake and report on activity and to demonstrate how “crowded places” are better protected, there are inhibitors to wider UK coverage which the insurance industry could support.

UK security has and continues to rely on public engagement and business interaction to ameliorate the threat. Given that the first rule of government is to safeguard its citizens, it could be argued that the public sector (law enforcement and Government departments) have not adequately explored (in a counter terrorism context) the use of Public Private Partnerships [PPP] within the CT space to provide ‘“real world’, cost-effective and proportionate mitigation measures with a scalable financial premium discount. For the wide ranging purchasers of terrorism insurance, from small and medium enterprises (SMEs) to multi-nationals, the drivers are significantly different, yet the desire to apply CT protective security principles remain relevant.

The application of a PPP ‘insurance-driven’ terrorism risk management Loss Mitigation Credit (LMC) model, rewarding participation in a national counter terrorism protective security model via a premium discount, additionally reflects a better rated risk for the insurers. Although reflecting low probability-high impact event or events, a consistent, inclusive and intuitive model that applies to not only crowded places but also the wider terrorism market, may be demanded of insurers. However, the Insurance industry itself, playing a vital partnership role can also take a lead.

By way of example the LMC offered by Pool Reinsurance (Pool Re) for businesses participating in the UK Governments crowded places program offers its members a 2.5 per cent discount if they undertake the Protective Security Improvement Activity (PSIA) tool. This scheme is limited to those sites or organisations that have been previously identified by NaCTSO and who are currently participating in the scheme.

Another option is the provision of innovation funding via access to Risk Improvement Funds that can be applied to terrorism property insurance. Funding is provided by the broker to the client so the client can undertake assessment and action plan security improvements. This assessment could included the PSIA or any other auditable improvement tool. This funding innovation is available through a limited number of brokers and is providing added value to clients, but equally as important, is allowing its clients to make tangible difference to business terrorism protection. Industry innovation, product differentiation and price will continue to support client retentions and attract new SME business in a soft market.

The ability and provision of protecting the UK and its business assets is not solely reliant on Government, or UK policing. The businesses themselves have a responsibility to not only protect, but to review, and identify improvements to their security regimes against terrorism attack methodologies, in a proportionate and consistent manner. Making UK PLC safer and more resilient can be enhanced if the insurance industry, especially in respect to property and business interruption insurance, can look to reward those clients that take protective security improvement activity seriously. This can be achieved either by providing innovation funding at the front end or LMC at the underwriter position.

About the writer

Spike Townsend GCGI, a former Met Police man, is Director and Co-Founder of STRAR Limited. Visit http://www.strar.co.uk/contact.

Related News

  • Interviews

    ABI appointment

    by Mark Rowe

    The Association of British Investigators (ABI), established in 1913, is a members’ body representing investigators in the private sector. With the retirement…

  • Interviews

    July 2016 print issue

    by Mark Rowe

    The decision by Westminster City Council in central London to close its monitoring centre and public space CCTV cameras is the cover…

Newsletter

Subscribe to our weekly newsletter to stay on top of security news and events.

© 2024 Professional Security Magazine. All rights reserved.

Website by MSEC Marketing