Trade Voice: Recommendations on the Riot Act

As is well known, Neil Kingham undertook a public review about the rationale for the Act, the way it was applied in the aftermath of the riots and the options for change, taking into account the value for money of possible changes. His conclusions were given to the Home Secretary.

The recommendations are generally welcomed by loss adjusters. After the riots, two firms of loss adjusters ran a bureau for the police to handle claims made under the Act. However, the Home Office took the view the Act did not allow them to delegate decisions to those firms. That, combined with the police double checking the work of loss adjusters, meant there were perhaps delays that could have been avoided.

Immediately following the riots in 2011, the option of using experienced staff from insurers and loss adjusters to provide an emergency team to handle and decide claims under the existing Riot (Damages) Act was considered and rejected, because the Act did not allow for the delegation of decisions. Neil Kingham has recommended this position changes.

Another issue has been the standard of proof of loss. Many of those affected by the riots were small businesses and individuals. In many cases all of their records were destroyed, and there was a disconnect between the pragmatic view taken by insurers and loss adjusters and that of the police authorities. For insurers, treating the customer fairly is routine. On the other hand, with no criticism intended, the police authorities are answerable to the Public Audit Office and HM Treasury.

This meant the police were requiring “absolute proof” of a loss. This may, of course, be contrary to Financial Conduct Authority requirements. This meant, in effect, a government regulator required one standard of proof and a government department a much stricter standard.

The Chartered Institute of Loss Adjusters, along with others, has been in discussion with the Home Office about the proposals for a much needed new Riot Damages Act. From the institute’s perspective, the Home Office has largely taken a pragmatic approach. Insurers have put the case that restricting the cover under the Act to private individuals and SMEs may have unintended consequences.

This is a reasoned argument and something to be considered. At the start of the enquiry there was a strong probability the Act could have been simply repealed.

The final point of interest is the ongoing case regarding Sony’s warehouse fire and looting in the riots. We suspect we have not heard the final decision on this element.

Malcolm Hyde, executive director, Chartered Institute of Loss Adjusters

This article was published in the 2 October edition of Post magazine.