A new model clause for clarifying coverage of motor terrorism risks has been published by the International Underwriting Association.
It has been developed after a growing spate of terrorist attacks using vehicles led to concern about a potential concentration of losses within the market.
Members of the IUA’s Casualty Treaty Group highlighted difficulties in quantifying and pricing motor terrorism risks and cautioned that unlimited exposure from a single event could fall to just one or two reinsurers.
Subsequently, the Motor Insurance Bureau (MIB), a not-for-profit body which deals with uninsured “hit and run” accidents, agreed to mutualize these risks and provide compensation for victims of vehicle-related terrorist events.
The new IUA clause (reference: IUA 02-025) clarifies the position by making available a model exclusion of losses from acts of terrorism for ordinary motor policies.
“The potential scale of liabilities that could be incurred through the unlimited cover for bodily injury was a major concern for motor reinsurers. A number of tragic attacks in the UK and elsewhere illustrated possible circumstances which could overwhelm the market and leave members of the public without adequate cover or compensation,” said Chris Jones, director of Legal and Market Services, at the IUA.
“IUA members liaised with the Motor Insurance Bureau as a solution to the problem was developed. Our new clause acknowledges the role that it will now play to help ensure innocent victims are able to receive the full compensation they deserve, in a way that is manageable for the reinsurance market,” Jones added.
Copies of the IUA clause are freely available to download from the association’s model clauses website.
The IUA represents international and wholesale insurance and reinsurance companies operating in or through London.)
Source: International Underwriting Association (IUA)
Photograph: Floral tributes laid at the site of the London terrorist attack at London Bridge in June 2017.
Related:
Topics Catastrophe Natural Disasters Underwriting Reinsurance London
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