UK motor insurers have voted that the Motor Insurers' Bureau is to handle and pay the claims from victims involved in a terrorist event, where a vehicle is used as part of a terror attack.
Following the vote, individual insurers will not be liable to pay out for claims where terrorists driving vehicles injure or kill people.
Instead, the motor insurance market will continue to fund the MIB to handle such claims via a levy similar to that used to pay out for claims involving uninsured drivers.
The MIB will also handle the compensation for victims of vehicle-related terrorist events that take place on or after 1 January 2019.
Dominic Clayden, CEO of the MIB told Post: “We consulted the motor insurance market on this issue in April and the consensus was that there was an appetite to change the way things worked, which saw individual insurers pay out on these sorts of claims.
“On the whole, the motor market has decided that motor claims arising from terrorist attacks should be dealt with by the MIB. People who are injured won’t see a difference in the amount of compensation that they receive under the MIB’s handling of claims. Going forward, if these events occur, the MIB will recoup the costs to be able to pay claims via a levy that insurers will pay into in proportion to their market share.”
The vote follows a consultation earlier this year between the MIB and motor insurers which determined the level of support across the market for a change of ownership of liability.
Clayden added: “Those who are innocently caught up in events where terrorists drive vehicles into people to injure and kill, can rely on MIB to pay and handle their motor related claims for these terrible events.”
Steve Maddock, chairman of MIB and chief operating officer at Direct Line said: “The motor insurance market has clearly signalled that it was right to consider if individual insurers or the market as a whole carry the risks associated with motor claims arising from terrorist attacks.
“The outcome of the vote indicates strong support to mutualise the risk and enable MIB to act in the event there are further terrorist activities. It is a good outcome for the industry and the public and one which is supported by the Department of Transport.”
David Williams, technical director at Axa told Post: “We think this is a really positive step for the motor insurance market. Terror attacks are so unpredictable that it makes sense to be spreading the costs across an entire industry. Self drive hire firms have been regarded as high are seen as high risk due to these types of terror attacks and people were struggling to get quotes if they had self drive hire firms. The move to have mutual liability reflects the random nature of these attacks.
“We don’t think that the uncertainty of the levy costs will be of concern to motor insurers and they will go through appropriate processes to set the levy with the MIB. It comes down to what insurers would rather - and uncertain levy or to be hit by a massive claim that impacts their business more than any other insurer.”
Zurich disappointed in new #discountrate. David Nichols, Ch Claims Officer: "The failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance - especially for higher risk customers." pic.twitter.com/ac1CfBzfxX— Zurich Insurance UK (@ZurichInsUK) July 15, 2019
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