The widespread nature of such attacks means no single business is always immune to the long lasting effects that such an event can have.
Businesses in the immediate vicinity are likely to be affected by interruption such as the denial of access to the property, loss of attraction and the threat of further attacks. These can have far reaching consequences for the properties in your portfolio, and it’s no longer just capital cities that are likely targets. The financial consequences for landlords can be huge!
Historically terrorism has typically involved complex planned attacks targeting high profile events or locations. As a result, terrorism insurance has focused on the physical damage caused to property. Fast forward to recent times and terrorism is taking a different form and has a new target.
As detailed in the Gallagher London Terrorist Attacks Special Report in June 20171, following the London and Manchester attacks a number of locations were targeted by the police and this led to operations being carried out across the UK s in areas such as Wigan, Brighton and Trelech amongst others, resulting in significant business disruption in a range of locations including places you wouldn’t usually expect.
Even if your business or your properties are not directly caught up in the incident, you can still be impacted in other ways. The target area will suffer physical damage but the businesses and properties in the area surrounding the attacks or, where follow up security operations are carried out, are also likely to be affected by non- damage based business interruption; which under many insurance policies is an exclusion within the property owner’s policy wording.
In the instance of the Novichok nerve agent attack in Salisbury on the 4 March 2018 the BBC reported instances where local businesses were losing up to £12,000 to £15,000 a week.2 Forced to close for a week, the owner of a business called B and R Textiles was then only given permission to open his shop via the back entrance, which is outside of the police cordon, so he could fulfil existing orders and fittings another small independent business called the Crystal shop reported that their footfall was down approximately 70% for the time year due to the police cordons in the affected area. If people stay away from a specific area, it is guaranteed to cause some kind of financial loss, at least until some kind of normality is brought back to the region, which can take some considerable time.
Imagine if your properties were affected like this, would you be able to recover? Luckily, there are measures that businesses can take to anticipate, prevent, respond and recover to such events. For example we offer a terrorism product which not only covers business interruption (including non-damage events) but also covers denial of access and can include chemical, biological radiological and nuclear attacks. . The losses can’t be claimed for if you do not have the correct cover for non-damage related incidents aligned to the terrorism risk, so it is so important to get suitable advice from property insurance specialists such as Gallagher, so when the unthinkable happens you have protection in place!
Gallagher recommendations to clients
As the threat levels across the UK, Europe and US remain high, there are certain measures that we would advise businesses to take to ensure that they can anticipate, prevent, respond to and recover from these events:
- Anticipation: Ensure that you have a full understanding of the current threat and what precautions should be made based upon the MI5 Security level and their recommended response to this.
- Prevention: Review security measures and procedures to prevent an incident from occurring at your location; bearing in mind the exposure to your employees whilst travelling and their duty of care to employees and the public whilst on their premises.
- Response: Update your crisis management plans – look at who will be involved, what information you will need, and communication strategies (both internally and externally). Determine the external support required.
- Recovery: Assess evacuation plans, alternative work sites, alternative suppliers etc. It is important to undertake a regular review of business recovery plans.
Gallagher support
We recommend undertaking a full review of any insurance policies that might be required to protect the business against this type of threat. For instance, does your cover include ‘Denial of Access’ in the terrorism policy wording (police cordons can be in place some distance from the actual incident and be in place for several hours or days), as well as ‘Loss of Attraction’ & ‘Threat’. You may have terrorism policy cover that may not respond. We urge you to speak to your usual Gallagher representative, who can advise you on our Terrorism and Crisis Resilience products.
Sources:
- Gallagher Terrorist Attacks Special Report June 2017
- https://www.bbc.co.uk/news/uk-england-43839176 25th April 2018.
