Insurance Response to Sydney Siege
Yesterday I received an inordinate number of phone and email questions regarding the response of insurance policies to the crisis in Sydney. While I answered one question, I did not feel it appropriate to post an article until such time as the siege ended. It has now transpired that the my worst fears have come to fruition and there has been unnecessary loss of life.
Before going on I would like to express my sincere sympathies to all those caught up in this horrific event and my personal thanks to the emergency services and the police who performed so well in such difficult circumstances and that it is now our industries turn to respond compassionately and promptly to those business owners that have been affected.
There are a number of ways an ISR or Business Pack policy may respond the Business Interruption losses suffered by retailers or others during this peak retail shopping period.
The first is by closure of public authority where the cover extends to provide an indemnity or threat of physical injury or damage. This varies from policy to policy and some contain a 48 hour or 72 hour time excess, which I understand that some insurers are considering waiving in this particular case to assist their customers during this critical period. While this has to be handled carefully so as not to set a precedent for future losses, it is certainly an act of great good will by those insurers to their customers.
Another cover that is available is the murder suicide extension, which in some policies is limited to the situation, while others extend to at, or near the premises; an initiative that LMI introduced following the Wales-King murder of April 4 2002 in Melbourne, where this coverage is provided it typically does not have a time excess, although there may be a policy sub-limit.
Max Salveson and I are currently reviewing all the wordings and will make recommendations to our broker clients and insurers over the next week or so in this regard.
It is unlikely that the Australian government will declare this as an act of terrorism, as it was one man acting alone and, like the Cronulla riots, I would suspect the private insurance industry would be looked to respond to the needs for the losses suffered by their insureds (earlier). I have written other articles on the topic of terrorism, most recently on the topic of the G20 summit. I have attached a link to this post below, for readers to view if they require further information:
Photographs sourced from ABC News Website