How to protect your business against the cost of terrorism

When the worst-case-scenario becomes reality and a terrorist attack takes place, its impact is felt long after the news reporters and camera crews move on. The recent attacks in Utrecht, Netherlands and Christchurch reminded the world that attacks of this nature can come at any time.

Fortunately, it's about to become easier to insure your business against losses caused by terrorism

Attacks can have severe consequences for commerce. Businesses were shut for weeks after the 2018 Novichok poison attack in Salisbury. Following the 2017 London Bridge attack, 100 local merchants in and around Borough Market lost £1.5 million.

Even in the direst situations, it’s important for businesses and sports teams to be able to stand strong and, ultimately, recover and return to normality. 

There is some good news for businesses keen to protect themselves against the risks associated with terrorist events: The Counter-Terrorism and Border Security Act 2019 was given Royal Assent on 12 February 2019. This piece of legislation makes it easier for insurers to provide businesses with more robust cover against losses caused by terrorism. 

Previously, businesses would not receive a pay-out if they had been indirectly affected by a terrorist event occurring in the vicinity of, but not specifically on, their premises. This was true even for businesses that lost profits after they were forced to close following an attack taking place nearby. 

As businesses are rarely the target location for such attacks, but often bear significant costs and losses in the aftermath, this is an important change.

What can you insure against?

There are now a variety of products designed to insure businesses against the risks involved with terrorist attacks, including:

• Contingency insurance: This umbrella term is given to insurance that covers a range of losses associated with unlikely or unconventional risks. It’s essential when the risk falls into this category, but legal remedies are unavailable, slow or inaccessible. Terrorism insurance can be added to such policies. 

• Terrorism insurance: Covers against loss or damage to the insured property and the ensuing loss of income caused by acts of terrorism and sabotage.

• Political violence insurance: This is similar to terrorism insurance and provides cover in the event of riots, strikes and/or civil commotion, malicious damage, insurrection, revolution or rebellion, mutiny and/or coup d’état, war and/or civil war, and counter-insurgency.

• Active assailant insurance: This covers loss of income in an attack when an attack was premeditated, a weapon was used and at least three people were injured. It can include PR, relocation and medical expenses, job retention or recruitment costs, counselling and psychiatric care and additional security measures.  

Cover for sports teams

For sports teams and sports-related businesses such as stadiums, it’s important to explore specific types of risk that may not be relevant for more generalised businesses such as retailers or offices. 

For instance, sporting events are high-risk situations where very large groups of people gather in one place. A team’s travel is often conspicuous - information about the airport and hotel they use is often readily available to fans, or at least it can be easily inferred from news coverage. There are also risks associated with high-profile players and coaches, including kidnap and injury. 

Terrorism related risks that sports teams, in particular, should consider insuring themselves against include:  

• Permanent Total Disablement
• Temporary Total Disablement
• Catastrophe Coverage
• Accidental Death
• Kidnap and Ransom
• Property risks
• Travel
• Event Cancellation and Non-Appearance.

Event Cancellation insurance is key for sports teams and associated businesses. A cancelled event, even when completely beyond the organiser’s control, can have serious financial implications.

This type of insurance can cover:

• Financial losses, including profits, associated with the event. 
• Non-Appearance: if a key person is ill or injured, including spouses or immediate relatives. 
• Equipment, both rented and owned. 
• Public Liability, third party property liability and entrusted property. 
• Tailored measures relating to the specific event in questions: personal accident, cash, baggage, till, all risks exhibition, exhibition stand, equipment linked to technical event, all risks tents, wedding dress, wedding gifts, wardrobe – costumes and make-up, forced loss of audience, all risks musical instruments, all risks positive, inclement weather, photo, video.

Loss of Attraction is an important factor that any business should be aware of. This type of business interruption cover protects income when a terrorist attack has a negative impact on the level of trade but has not directly targeted the business. Tourism and visits to an area drop following a terrorist event, leading to losses for businesses that rely on these visitors. 

Sports teams could rely on a pay-out for loss of attraction if a nearby terrorist event means that fans are no longer willing to gather in their stadium to watch them play.

Immediate expert response to crises

There may be times when businesses and/or sports teams are so severely directly affected by an attack that they need a highly specialised team to spring into immediate action. Kidnap and Ransom products are available and provide an expert crisis response team. Crisis response insurance is also available, and again provides an expert response to specific events such as political upheaval. 

While the risks may seem complex, terrorism insurance products have been designed to give all manner of businesses and organisations the ability to stand strong when the worst happens. Speaking to an experienced broker will provide clarity and confidence when it’s needed most.