Insurance Post

Pressure for riot damages reform mounts

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MPs and local authorities are keeping up the pressure for a better deal for property owners and businesses in the wake of the riots of summer 2011. This should ensure that the review of the Riot Damages Act 1886, which was belatedly set in train by the Home Office earlier this month, is not allowed to sink below the ministerial horizon.

The newly elected Labour MP for Croydon North Steve Reed has secured an Adjournment Debate on the topic next Wednesday and is expected to raise the patchy nature of the compensation paid out. Croydon, of course, was one of the worst hit town centres with several shops and homes destroyed in major fires, producing one of the iconic images of that troubled summer of a woman jumping to safety from her burning first floor flat.

Also, today the London Evening Standard has highlighted the problems faced by an Ealing businessman trying to get his cafe up and running again after it was destroyed having been set on fire by rioters. This highlights the problems he had in claiming compensation, a common complaint whenever this issue is discussed.

What all of this highlights is the inadequacy of the exisiting legislation with its antiquated forms, outdated language, references to pre-decimal currency and huge gaps in cover. When the Home Office first started talking seriously about reforming the Act last year, the Association of British Insurers was very hesitant because it feared more might be lost than gained. Now it seems to have come round to accepting that reform is necessary as Post reported when the review was confirmed.

Aidan Kerr, head of property at the ABI said that insurers had faced £200m in insured damage from the riot, with over 95% of business claims settlesd.

"The Riot Damages Act provides important compensation to the uninsured, however the riots of 2011 highlighted the century old Act needs to be reformed for the modern day, so we welcome the independent review," Kerr said.

"We need to see the Riot Damages Act modernised with a more streamlined and standardised process to ensure those most vulnerable have the reassurance it will help them in what is inevitably a distressing time."

As well as clearer riot definitions, the industry body is also calling for standardised claims process for police authorities to bring an end to confusion over what information is necessary, as well as an increased time limit for claims.

It will require careful lobbying by the insurance industry to ensure that police forces do not use the review to further limit their responsibilities for compensating people and businesses when rioting occurs in their regions. Shifting more of the burden to private insurers could well appeal to the Home Office which might be able to dress it up as a cut in public expenditure to please the Treasury.

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