Reports of £750m bill ‘rubbished’ by insurance bosses
The riots across the country will cost insurers between £200m and £300m, industry sources estimated.
There were reports that insured losses arising from the riots could reach £750m, but that was privately rubbished by insurer bosses.
Allianz UK – which typically represents 10% of the market – is expecting its riots-related claims to hit £25m. One of Allianz’s biggest claims is the Tottenham, London branch of German superstore Aldi – which was razed to the ground – for £4m.
Zurich will have to pay out around £10m for the Carpetright store that was torched in Tottenham.
But RSA has been hit by the biggest claim so far: it is on the hook for £20m-£25m for the arson-hit Sony warehouse in Enfield, London. RSA declined to comment.
Broker and insurer chiefs agreed that the riots were a chance for the industry to restore its credibility. The public perception of insurance has been badly hurt by soaring car insurance premiums, the public outcry over referral fees and the scandal of mis-sold payment protection insurance.
Aviva intermediary and partnerships director Janice Deakin said: “This industry does get some stick but, in the majority of instances, putting customers first has been the most important thing. This is a chance for the industry to prove its worth.”
Allianz commercial boss Chris Hanks said: “Do I think we are being very fair, very helpful and do I see the government responding to that? Definitely. This is a much better joined-up effort and done very quickly.
“We’re still writing new business in riot areas. We didn’t close down. We did not change our quote tactics at all.”
LV= is referring some automatic quotes in riot-hit roads to commercial branches as a precautionary measure.
One concern is that brokers could ask for quotes next to properties that have suffered structural damage from riot-related fires or vandalism.
Meanwhile, rating agency Fitch said the fall-out to insurers from the riots will be fairly limited.
“At current loss estimates, Fitch believes the industry as a whole will be able to absorb these losses into earnings,” Fitch insurance managing director Chris Waterman said in a statement.
“Ratings of insurance companies will be affected if economic costs impair balance sheet strength, and at this moment that seems unlikely.”
We say …
? The riots will be a real test for those brokers that have put business interruption cover in place. Firms with a 12-month BI cover that end up needing 18 or 24 months may blame the broker – and legal action could follow.
? Swift responses to help businesses following the riots will do some good for the insurance industry, but its image is not likely to improve much with the current payment protection mis-selling scandal still rumbling on.
? The industry should brace itself for more civil unrest that may result in public damage. There are still dangers of protests against government cuts getting out of control.