HC 1456 Home Affairs CommitteeWritten evidence submitted by the British Insurance Brokers’ Association (BIBA)

1. Was it a Riot?

1.1 BIBA noted that the Government did not use the term “riot” in any public conversation. We would be interested to know whether this was because of the potential financial implications for the Police in compensating victims under the terms of the Act. Instead of “riot”, the Government used various other terms such as “criminality” or “disorder”. This lead to frustration from the insurance industry and was surely unhelpful to many “uninsured” people in need of central guidance about how to claim within the rapidly decreasing 14 day deadline under the Act. When BIBA queried this with Government officials it was clear to us that at that point the Police had limited resources and were not in any way prepared to respond to the number of potential riot claims that were occurring.

2. Application of the Act

2.1 BIBA’s main area of concern was the confusion generated by the application of the Act. In the first instance, the statutory claim form was not available on Government websites and when BIBA finally obtained the form itself it was so outdated it contained columns for pounds, shillings and pence.

2.2 BIBA co-operated with Government in the design of the new form. We were happy that this new form was created, but the timescale was a major concern because of the pressing nature (at that time) of the 14 days deadline within the Act.

2.3 There were insufficient guidelines about what could be claimed for. BIBA was able to interpret the Act and give guidance to our members and to media but the initial lack of a central government source of information was a problem for small retailers and others who had suffered damage and were uninsured to some degree in the media. This lack of information coming from Government was particularly worrying as this was a news story that was the main headline for some considerable period and involved the recall of Parliament.

2.4 In our view, there is a need for greater Government clarity and advice for consumers and businesses, specifically via Business Link and the Money Advice Service, on the value and benefits of insurance and what is and is not covered under the Riot (Damages) Act (eg business interruption, liability and motor vehicles parked on the road are not covered). BIBA would be keen to work with Government to develop these important areas.

2.5 The insurance industry welcomed the extension of the 14 day deadline to 42 days by the Prime Minister on the 11 August along with his comment that “The government will ensure the police have the funds they need to meet the cost of any legitimate claims”. However, it is clear to our practitioner members that 14 days is not a remotely realistic period for businesses to quantify losses and make a full submission under that Act; also there is no obvious necessity to have such a strict 14 days deadline. We strongly recommend that the 14 days be changed to a minimum 42 days on a permanent basis.

3. Handling of Claims

3.1 In the aftermath of the riots, BIBA suggested that as the insurance industry was dealing with many of the claims, that we could combine forces with loss adjusters and Government in order to offer a straightforward customer friendly way to claim under the Act. We were pleased that this was developed and a solution was put in place with Cunningham Lindsay.

4. Insured and Uninsured

4.1 We were pleased to see that there has been a surge in enquiries for property insurance following the riots. This will ensure better protection in the future but we remain concerned that government “grants” could undermine this. Current policyholders may feel aggrieved that they have paid for a premium and yet someone else who has not contributed to the “common pool” will receive a “bailout” from the Government. This issue needs further consideration.

5. Timescales

5.1 We believe that the timescale to address the situation was longer than necessary:

5.2 First riot: 6 August.

5.3 PM move to 42 days announced on 11 August.

5.4 New riot claim form available to BIBA on 15 August.

5.5 New Government centralised claims centre announced on 17 August.

6. Outstanding Issues

6.1 There remain some outstanding “practicality” points involving deductibles (excesses), when customers are claiming from both sources (the insurer and the Police). There is uncertainty about the need to complete a Police Riot Act claim form and the insurer form as well. In these cases we are advising people to contact the Glasgow helpline but better to do both and not fall between two stools.

In summary we would say:

7. What Went Well?

7.1 The Government responded positively to the problems caused by the riots (extending the time to claim under the Act to 42 days).

7.2 Government officials worked constructively with BIBA to create the new form and guidelines to upload onto Direct Gov and make available to our members.

7.3 We welcome the creation of a new centralised claims centre in Glasgow to help people with making their claim under the Act.

8. What Could Have Gone Better?

8.1 The unhelpful “game of poker” where the Government was refusing to acknowledge the riots as riots despite it being completely obvious to all and emblazoned across the BBC.

8.2 The general problem of the Police and Government not being sufficiently prepared to exercise their liabilities under the Act (no form available, no information available, no emergency call centre available).

8.3 There being too long a period to resolve the grey areas (the outstanding queries).

9. Conclusion

9.1 The Government was not sufficiently prepared to react immediately to meet their statutory duties when the riots first began (which was disappointing considering other EU countries have been suffering riots in the last 12 months).

9.2 After considerable effort by the Government and the insurance industry, BIBA believes that the Government is now in a position to respond to future riots claims under the Act, but the period of uncertainty and confusion was of great concern. We would be happy to work with Government to ensure a better response is in place for any other event in the future and to help with the overall resilience of UK businesses going forwards. Indeed we are engaged with the Cabinet Office and others with such business continuity groups.

9.3 We would also recommend the time to claim be permanently changed from 14 to 42 days under the Act as 14 days is clearly not sufficient time to obtain the suitable information estimates required, particularly if your property is cordoned off by the Police as a crime zone or unsafe building.

9.4 We hope you find this feedback helpful and would be happy to advise the committee further on any specific points or further detail.

September 2011

Prepared 22nd December 2011