ABI calls for overhaul of Riot Act

The ABI has called for an overhaul in the law that provides compensation to be paid to the victims of riots.

In its review of the financial costs of last August’s riots published today, the ABI found that insurers reacted quickly to the riots and expect to pay out £200m to customers for damage to homes, businesses, vehicles and business interruption losses.

They have fully settled or made interim payments for 95% of claims from householders, 92% from small and medium businesses, and 75% of large commercial claims, according to the report.

The ‘£40 million a Day. Counting the Financial Cost of the August 2011 Riots’ report also concluded that the Riot (Damages) Act 1886, which provides compensation to those without insurance or under-insured who suffer riot damage, must be updated to speed up and simplify the process of paying compensation.

Insurers are able to claim under the Act for payments made to policyholders, but recent government figures suggest more than half of claims made have been rejected.

ABI director of general insurance Nick Starling said: “Insurers reacted quickly to help thousands of customers recover from last August’s devastating riots.

“The priority was ensuring that customers could get back in their homes and that businesses could resume trading as soon as possible. Insurers are doing everything possible to fully settle the handful of outstanding claims, including making interim payments to help customers recover.”

The ABI said it wants:

• A uniform definition of what constitutes a ‘riot’ which is accepted by all police authorities.
• A streamlined and standardised claims process for police authorities in order to eliminate delays and confusion for victims over the information they need to provide.
• The time period for claims to be made should be extended from 14 to 90 days so that those who suffered property damage have enough time to claim, especially as in some cases there may be a delay in being able to access their property to assess the damage.  

Starling continued: “The government must review and update the Act to ensure it reflects the needs of today’s society.

“We need to make sure that compensating riot victims is the priority, but the out-dated Act means the process is too slow, too bureaucratic and leaves too many people unable to get on with their lives.”