The MIB will decide by the end of October whether to buy reinsurance to help cover terrorist-related claims

Motor claim pay-outs linked to terrorism against MIB insurers will be split between the membership from next year.

The MIB last month began polling members on whether they would be in favour of sharing the payment of terror claims through the MIB central fund, and over 75% of members were in favour.

The change will come into effect from 1 January 2019, and MIB chief executive Dominic Clayden said the details of how the MIB would respond are still being worked out.

But the response will include a buffer being raised proportionately among members based on the levy they currently pay to the MIB. Clayden said the float would be “relatively modest”.

And he said while it would pose a large operational challenge, he hoped that the outcome would speed up how claims are paid and help the industry’s reputation among the public.

He said: “Inevitably these events are by their nature horrible and they are high profile, so we have to deal with being available 24/7.

“Part of it is making sure that everyone who needs our help can get access to us and we get to them as soon as possible.

“That is the biggest operational challenge. If you think of most car accidents you would generally be able to speak to the driver involved and you can generally figure out who was in the other cars.

“By the nature of these horrible events, which to date have often involved people driving into pedestrians, it is not so clear.

“It’s about making sure we get access. We’re certainly working to make sure we have good early up front relationships with both the police and the security services, so that they understand our role, and so that we can work with them as soon as possible to get to the people we need to get to in order to help them.”


Between now and then the MIB will also decide on whether to purchase reinsurance from the central fund. Clayden said he hoped this decision would be reached by the end of October.

Clayden said: “One of the options we are looking at is reinsurance and certainly we are going to be exploring that over the next few months.

“We have had some early approaches from reinsurance companies saying they would like to have a conversation, but like purchasing any reinsurance, it is going to depend on what cover is available and how much, and then that’s a decision I will be taking to the MIB board and we will make that decision.

“The trade off we are doing would be pay in some premium up front, but that would cap our potential claims going forward and that’s a balance we will have to work through.”

In a previous consultation, some members had indicated that payment of terrorist claims should only start at a certain level, with one member suggesting the MIB should only step if claims exceed £50m.

But Clayden confirmed the all terrorist claims would be paid through the fund.

Steve Maddock, chairman of the MIB and chief operating officer at Direct Line Group said: “The motor insurance market has clearly signalled that it was right to consider if individual insurers or the market as a whole carry the risks associated with motor claims arising from terrorist attacks.

“The outcome of the vote indicates strong support to mutualise the risk and enable MIB to act in the event there are further terrorist activities.

“It is a good outcome for the industry and the public and one which is supported by the Department of Transport.”

BIBA praise

Graeme Trudgill, BIBA executive director, said: “BIBA believes this vote by MIB members to mutualise motor terrorism risk is absolutely the right thing to do.

“Gaps in terrorism cover were highlighted in our 2018 manifesto and we committed to helping the market find solutions.

“The use of a vehicle as  a weapon is not what motor insurance is designed for and it would be wholly unfair  not to mention unsustainable to hold a single motor insurer responsible for any subsequent compensation payments. 

“I must say well done to the MIB and its members for bringing about this change so quickly.”