Policing Large Scale Disorder: Lessons from the disturbances of ...

Ev w32 Home Affairs Committee: Evidence
3.2 While the insurance industry offers policies to cover homes, businesses and vehicles against riot
damage—and naturally we would encourage people to buy these products, which can be tailored to all kinds
of businesses, possessions and properties—the reality is that not everyone takes out insurance. We expect
thousands of claims to be made under the Act by the uninsured and without it they would be left uncompensated
against acts of violence and looting which were no fault of their own. We believe that, just as victims of crime
can be compensated under the Criminal Injuries Compensation Scheme, victims of the recent riots should also
be afforded compensation for their losses.
3.3 Insurers can, of course, recover some of their outlay under the Act, but it will, by no means, be all of
their outlay. Business, home and car insurance offer wider coverage than is available under the Act (for
example, home insurers offer contents cover on a “new for old” basis, whereas the Act is likely to compensate
on the basis of the value of the item taking into account any depreciation) and insurers will not be able to
recover their costs where policy coverage exceeds the protection provided under the Act.
3.4 It should also be noted that business, home and motor insurance markets are all highly competitive and
operate on very tight margins. Contrary to how the industry is often portrayed, profits, where they exist, are
not excessive. Riot is a standard feature of property insurance in the UK. However, the availability and price
of these products is determined to a large degree by claims experience. The existence of the Riot Damages Act
is taken into account by insurers when they are deciding whether to offer cover to a customer and the premium,
terms and conditions they wish to offer.
3.5 Without the comfort that insurers take from the existence of the Act and the fact that they can recover a
proportion of their losses under it, the insurance market is likely to behave differently than it currently does.
Insurers would be more likely to seek to try to assess the risk of rioting and the likely cost of rioting in
particular areas and for particular businesses and properties. Claims experience would, undoubtedly be a more
significant factor in the minds of underwriters. Consequently, customers based in those areas which had suffered
from riots would be more likely to see their premiums rise and the terms and conditions change (for example,
through higher excesses for riot or even riot exclusion clauses) than is the case with the protection afforded to
insurers and their customers by the Riots Damages Act.
3.6 In conclusion, therefore, while it may seem to some to be perverse for insurers to be apparent
beneficiaries under the Riot Damages Act, the reality is that the insured public are the real beneficiaries because
they benefit from the wide availability of coverage against riots throughout the UK (in contrast to many
insurance markets) and from lower property insurance premiums than would be the case if the Act was not
in force.
September 2011
APPENDIX 1
Table to show countries where damage caused by riots is, or is not, a standard feature of home and business
insurance policies:
Home/commercial property
insurance coverage of rioting Notes
France √
Italy x Extensions available for riot damages
Turkey x Extensions available for riot damages
Sweden Varies*
Norway x
Finland √
Hungary x
Estonia x
Portugal x Extensions available for commercial
policies
*Of the providers queried, all compensated home policy holders but only a subset compensated commercial
policy holders.
Source
The content of this annex is based on correspondence with various organisations in Europe including the CEA,
several national insurance associations and their member firms. As such it may not provide a complete picture
of the markets in question.