- Pricing and telematics lead the charge as insurtech patents jump 40pc
- FCA puts general insurance pricing practices under review
- Volvo and Baidu reach agreement to produce autonomous vehicles
- Cyber and D&O exposures increasingly intertwined, Airmic report finds
- Arch selects Touchstone for cat risk modelling
New UK riot legislation leaves room for dispute, lawyers warn
Written by staff reporter
The 2016 Riot Compensation Act takes effect on Thursday 6 April 2017, which is good news for insurers, according to international law firm Clyde & Co. Repealing the Riot (Damages) Act 1886, the Act creates a new scheme that allows compensation to be claimed from local police authorities for property that is damaged, destroyed or stolen in the course of a riot.
The Riot Compensation Regulations 2017 set out the procedure and bases for making claims under the Act and for the handling of claims and decision-making by claims authorities, and it is this that the law firm says this will be the main area of interest.
The new Act was introduced in response to the London Riots of 2011, which brought the little known and used 1886 Act into the spotlight. During the course of processing claims it became apparent that the 1886 Act was no longer fit for purpose.
As a result of the experience from 2011, the Riot Compensation Act creates a new scheme for property damaged, destroyed or stolen during a riot. It allows compensation to be claimed for uninsured or inadequately insured property, and to be reclaimed by an insurer. The Act abolishes the right to consequential damages and introduces a ‘compensation cap’ of £1m per claim.
Partner at Clyde & Co, Neil Beresford, said the Act is good news for insurers, tidying up the scope of the compensation rules and bringing an "old and obscure Victorian statute" up to date. "Its primary value for insurers is as a clarifying measure although there are some useful additions, such as the extension of the compensation scheme to motor vehicle damage,” he said.
It is the regulations that, he contends, that will have the greatest significance for insurers. The statue sets out the general principle; the regulations dictate how it will work.
"The regulations set out a new streamlined claims process, addressing the problems that came to light following the 2011 riots whereby claimants faced a confusing and long drawn out claims process.
“A key issue will remain how to identify when a riot has occurred. This was one of the major problems in the 2011 London riots. In parts of London, rioting was definitely taking place, but many incidents were no more than opportunist and isolated acts of damage and theft. One cannot say that London in its entirety was subject to riot.
“The language in the Act has been simplified, with the definition of ‘riot’ now according with the criminal law as set out in section 1 of the Public Order Act 1986."
Some of the practicalities of the adjustment process have also been tidied up. Beresford said: “After the London riots, many of the mainstream loss adjusters became busy or conflicted, and police authorities encountered difficulties in finding enough advisers to validate claims. The regulations contemplate the formation of a riot claims bureau – to be the subject of further regulation when required – to improve the adjustment process. Many issues will remain to be ironed out at that stage."