Rise in vehicle terror attacks leads to policy changes
The International Underwriting Association (IUA) has published a new model clause for clarifying coverage of motor terrorism risks following 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 mutualise these risks and provide compensation for victims of vehicle-related terrorist events.
The new IUA clause clarifies the position by making available a model exclusion of losses from acts of terrorism for ordinary motor policies.
Chris Jones, director of legal and market services, at the IUA said: “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.
“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.”
