UK Motor Insurers to Mutualize Claims for Terrorist Attacks Using Vehicles as Weapons

July 23, 2018

UK motor insurers have voted for the Motor Insurers Bureau (MIB) to handle and pay the claims from victims involved in a terrorist event where a vehicle is used to kill or injure.

MIB is the UK’s not-for-profit body which deals with the claims from victims involved in uninsured and hit-and-run accidents. The compensation for victims of vehicle-related terrorist events that take place on or after Jan. 1, 2019 will now also be handled directly by MIB.

All motor insurers writing business in the UK are members of MIB, which is funded through a levy arrangement.

More than 75 percent of motor insurers by voting rights agreed the change, following a 28-day ballot which closed on July 19. As a result, Article 75, the relevant element within MIB’s Articles of Association, has changed to bring these within the scope of the claims paid by the bureau.

This follows on from the consultation earlier this year where MIB was asked to determine the level of support across the market for a change to be made so that the liability of the Article 75 insurer moved to MIB.

MIB may explore the possibility of reinsuring some of the liability.

“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,” said Dominic Clayden, chief executive at MIB, in a statement.

The British Insurance Brokers’ Association (BIBA) “believes this vote by MIB members to mutualize motor terrorism risk is absolutely the right thing to do,” said Graeme Trudgill, BIBA executive director.

“Gaps in terrorism cover were highlighted in our 2018 manifesto and we committed to helping the market find solutions,” Trudgill added. “The use of a vehicle as a weapon is not what motor insurance is designed for, and it would be wholly unfair, not to mention unsustainable, to hold a single motor insurer responsible for any subsequent compensation payments. I must say, well done to the MIB and its members for bringing about this change so quickly.”

Steve Maddock, chairman of MIB and chief operating officer at Direct Line Group, said: “The motor insurance market has clearly signaled 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 mutualize 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.”

Source: Motor Insurers Bureau/British Insurance Brokers Association

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