Fitch Ratings has said it believes the losses from the recent disturbances across the country will have no impact on UK insurers' ratings. Although the ultimate economic and insured costs of the riots that have affected Greater London and other areas for the past several days will not be known for months, the Association of British Insurers (ABI) estimates insured loss damages will exceed £100m.

"At current loss estimates, Fitch believes the industry as a whole will be able to absorb these losses into earnings," says Chris Waterman, managing director in Fitch's Insurance Group. "Ratings of insurance companies will be affected if economic costs impair balance sheet strength and at this moment that seems unlikely." However, the agency recognises that situation is fluid and will continue to monitor events to determine if there is any ratings impact.

Fitch also believes that these events may cause pricing to rise in loss-affected areas but the unrest will not be a catalyst for major price changes in the UK.

In order to determine the cost of the riots, insurers will need to define what property damage was caused during the riot, review policy coverage, and whether or not the Riot (Damages) Act of 1886 will shift the economic burden from insurers to the police and ultimately the UK taxpayer. If the Riot Act does end up picking up some of the loss, it only covers property damage and not business interruption.

The policies most likely affected during these riots are residential property, motor, commercial property, and business interruption. It will be most difficult to gauge the ultimate insured costs of business interruption. Business interruption policies typically pay the insured a portion of their lost income when a business was unable to operate under certain circumstances.

Some of the more complicated and not easily decipherable claims will likely lead to litigation, which will add to the ultimate costs of the riots and delay payments.

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