Government criticised for failing to act over flawed terror insurance that left London traders exposed

 
Oliver Gill
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Borough Market was cordoned off for 11 days in the wake of the London Bridge terror attacks (Source: City A.M.)

The government has been slammed for continuing to drag its heels over helping businesses to protect themselves against the fall out of terror attacks.

The recent London Bridge attack highlighted the structural flaws in the state-backed terrorism insurance lifeboat, Pool Re.

Hundreds of restaurants, traders and other businesses suffered huge financial losses after police cordoned off the historic Borough Market and surrounding areas for 11 days in the wake of the London Bridge attack in June.

But many firms saw claims against terrorism insurance policies rejected because they only covered physical damage rather than business interruption.

Pool Re was set up by the government in 1993 in the wake of a spate of terrorist attacks hitting buildings in particular. It was set up to provide insurers with the critical reinsurance to underpin writing policies.

Federation of Small Businesses (FSB) chairman Mike Cherry today demanded the government change the "outdated law which governs Pool Re so that small businesses can insure themselves against losses due to non-damage business disruption".

Revealed: Ministers were warned Borough traders' insurance claims would be refused

Ministers have been warned about the critical gap in the cover Pool Re provides for approaching two years.

In August, Pool Re chief executive Julian Enoizi told City A.M. he had repeatedly warned the government that an event such as the London Bridge attacks could have a catastrophic impact on businesses.

Today, Enoizi welcomed the comments from the FSB.

"We’re very pleased that FSB has joined us in calling for this important change, a change which we have been discussing with the government for some months," he said.

"Small businesses should be given every opportunity to cover themselves against what can be significant business interruption that follows a terrorist attack, even when their own property is not damaged."

The Treasury declined to comment.

Read more: Borough Market opens for extra days as trader rent written off

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