UK: Pinsent Masons Insurance Briefing - Recent Attacks Are Broadening UK Insurers' Views Of Commercial Risks From Terrorism, Says Expert

Last Updated: 28 June 2017
Article by Nicholas Bradley, Colin Read and Alexis Roberts

Welcome to Insurance Briefing - a new fortnightly round-up of insurance legal and business developments published on Out-Law - with analysis and commentary from the insurance team at Pinsent Masons.

The five topics of focus this week include:

Recent attacks are broadening UK insurers' views of commercial risks from terrorism, says expert

The nature and effects of the recent terrorist attacks in London and Manchester are broadening the industry's understanding of terrorism insurance, and could result in a permanent shift away from policies based on damage to property. Traditionally, terrorism policies have tended to kick in when there is damage to the property of the insured. But the real damage caused by the 'lone wolf'-style tactics adopted by the attackers at Westminster, Manchester Arena and London Bridge was loss of life, injuries and significant disruption to local businesses. So-called 'denial of access' cover, for example, tends still to be linked to property damage. Insurers must therefore focus on how business interruption cover is being extended beyond the realm of property damage. The development of contingent business interruption cover in response to recent earthquakes and floods that have affected global supply chains is a good example of an alternative approach, although even here there has to be an element of damage to the supplier of a business, if not to the business itself. Read more...

Aviation insurers publish new model clause to address Brexit uncertainty

Aviation insurers have developed a new model clause which will help ensure continuity of cover after the UK's exit from the European Union. Published by the Aviation Insurance Clauses Group (AICG), the clause would allow for the contract to be transferred to another provider if the original insurer or reinsurer is unable to continue cover or pay out on a cross-border claim as a consequence of Brexit. Although designed with aviation policies in mind, the wording of the clause is "relatively generic". This will make it easy to adapt for use in other classes of business, according to Chris Jones of the International Underwriting Association (IUA). Read more...

Brexit-dominated Queen's Speech signals start of 'fraught' parliament, says expert

The government intends to pass at least eight separate pieces of legislation in the run-up to the UK's departure from the European Union, to ensure that the country "makes a success of Brexit".The plans include a 'Repeal Bill', which would repeal the 1972 European Communities Act and convert all EU laws applicable to the UK into domestic law at the point of Brexit and not before, as well as creating temporary powers for parliament to amend the statute book through secondary legislation where existing provision is inconsistent with the act of leaving the EU. Separate bills would establish new national policies on immigration, international sanctions, nuclear safeguards, agriculture and fisheries. A total of 27 pieces of planned legislation were included in the 'Queen's Speech', marking the state opening of parliament. As previously announced, this parliamentary session will last for two years instead of the usual one. The contents of the Queen Speech will be subject to a vote in parliament, which is due to take place next week.Parliamentary agent and government affairs expert Richard Bull of Pinsent Masons, the law firm behind Out-Law.com, said that the "pared down ceremonial" accompanying the speech reflected "the pared down content of the legislative programme for the next two years". Read more...

Insurers need to re-evaluate risk profile of businesses handling data to account for potential fines under GDPR, says expert

Insurers should re-evaluate the risk businesses handling data are exposed to as a result of the major financial penalties that could be imposed under new EU data protection laws. The General Data Protection Regulation (GDPR) will come into force on 25 May 2018 and introduce the possibility for substantially increased fines to be issued for data protection breaches compared to those which can be imposed currently. Service providers that process personal data on behalf of other organisations, data processors, will face new obligations and may be on the hook for substantial fines where failings are identified. The toughened approach to data protection fines envisaged under the GDPR is something that data controllers and data processors need to consider carefully when putting in place data processing contracts. Insurers must also recognise the impact that the changes could have on the risk profile of businesses they provide cover to. Read more...

PRA consults on SIMR amendments mandating board diversity for insurers

Large UK insurers could be required to have policies in place to promote board diversity, under plans put forward by the Prudential Regulation Authority (PRA). The proposal forms part of a package of "amendments and optimisations" to the Senior Insurance Managers Regime (SIMR), which came into force last year. It is designed to complement existing initiatives to promote diversity on financial services industry boards, and to tackle the 'groupthink' among board members that emerged during the financial crisis, the PRA said. "More effective challenge and including a broader set of perspectives should help boards to identify a wider range of risks and be better positioned to understand their impact, in turn providing greater protection for policy holders," the PRA said in its consultation, which closes on 22 September. Read more...

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