Insurers will have to prove insured business has annual turnover of £2m or less
The industry has raised concerns over government plans to introduce a cap on how much insurers can reclaim for businesses affected by riots, that have an annual turnover of £2m or more.
Following the launch of the Home Office’s review into the Riot (Damages) Act, Biba also raised concerns over the possible introduction of an excess on riot compensation claims. The ABI said that the cap could act as a disincentive for larger companies to locate to or stay in some areas.
Under the proposals, the cap means that insurance companies will only be able to make a claim for reimbursement if they can prove the business they are insuring has an annual turnover of less than £2m.
In the consultation document the Home Office said: “The government is of the view that the act should be designed to compensate the most vulnerable and in this regard, the focus should be on protecting individuals and small businesses rather than large companies.”
On the introduction of an excess the government added: “Most insurance claims contain a mandatory excess and introducing a small excess would lessen the burden on the public purse.”
Biba executive director Graeme Trudgill said: “We are pleased with the many improvements being suggested in the consultation. Although there are some areas where we are concerned for customers. We will be suggesting an alternative approach.”
The review follows an independent review of the Act commissioned by the government to assess whether it was fit for purpose after London and other major cities were affected by serious public disorder in the summer of 2011.
The deadline for the consultation is 1 August.
The proposals unveiled by the Policing Minister today include:
- allowing higher value settlements by providing “new for old” replacements for destroyed or damaged goods;
- increasing the time limit in which people can make claims application;
- allowing people to submit claims electronically, speeding up and simplifying the process; and
- including compensation for damage to vehicles, previously not covered by the Act