Flexibility needed to meet terror concerns for brokers

FOR THE PEOPLE and businesses of Britain, terrorism has become a significant threat in recent years.

The Government published its National Security Review which says that at best the threat from Islamic terrorist groups will remain at current levels for at least two years and may well increase. It warned that British intelligence officials believe Islamic State will diffuse and shift, but is still looking to project its threat outwards, with the West its major target. The threats have also seen the nature of terrorism attacks change with less use of sizable explosive devices, rather attacks which target public places and people with loss of life rather the loss of property the main aim.

At Fiducia we have worked with the Lloyd ‘s market to create a terrorism product that provides the flexibility and cost effectiveness that the UK regional market requires.

The Pool Re scheme remains inflexible due to the adverse selection rule and the requirement that the portfolio must be insured on a full value basis Policyholders want to have the flexibility to selectively insure specific locations in UK cities rather than those in the more rural areas. Our product allows our Policyholders to be selective and they are free to choose which properties to insure which can result in a substantial premium saving compared to Pool Re which stipulates that the whole portfolio must be insured.

We also offer coverage on a First Loss Limit reflecting the estimated maximum loss the Policyholders total assets may suffer but not a complete loss of all assets. This is typically required where insured property is located across multiple locations across the UK and the risk of a terrorist event affecting all insured properties is deemed extremely remote. Again, the First Loss Limit option allows for premium savings to be made compared to Pool Re who require all the assets to be insured on a full value basis.

We commonly run, for our Policyholders who have multiple sites, a Bomb Blast Analysis which assists them and their broker in selecting a First Loss Limit which better reflect their risk requirements.

The biggest issue remains the fact that many Policyholders are unaware of the flexibility that a standalone terrorism policy can offer – the ability to choose which locations to insure and opt for a First Loss Limit. It may well be that regional brokers are also unaware that there are choices in the market and as such their clients are exposed and they as brokers are missing an opportunity.

We regularly see brokers securing new and retaining existing business by utilising the advantages of our terrorism product flexibility.

At Fiducia we have the ability to provide a policy limit of £150m with access to more capacity if required.

We do of course as standard provide protection for terrorism incidents where there has been no property damage but there has been a business interruption loss due to Denial of Access. In addition, we provide Loss of Attraction. Both of these extensions provide a generous radius of 1 mile.

It is clear that the threat is set to remain, and as an industry we need to ensure that we remain relevant to our clients and their risks.

At Fiducia we have worked with the Lloyd’s market to create a terrorism product that provides the flexibility and cost effectiveness that the UK regional market requires.