Insurers see ‘wide variety’ of claims reaching ‘hundreds of thousands of pounds’ linked to UK riots

Insurers have been seeing a “wide variety” of claims after riots broke out across the UK last week – but the scale of this month’s action is not like past riots in 2011.

That was according to Peter Farrelly, Sedgwick UK’s chief operating officer, who told Insurance Times that there had been an uptick in claims in recent days due to damage to public and commercial infrastructure.

The riots began last week (August 2024) after three girls were killed in an attack at a Taylor Swift-themed dance class in Southport.

Protests have been held across the UK, including in London, Rotherham, Liverpool, Middlesbrough and Northern Ireland.

The unrest has resulted in homeowners having their windows smashed, cars being torched and businesses being looted and vandalised.

The ABI urged affected policyholders to get in touch with their insurers, emphasising that they “will be on hand to do everything they can to help customers as quickly as possible”.

Farrelly said the insurance industry was not “anywhere near” putting a number on the total amount of insured losses, but that the scale of the loss bill would not be comparable to 2011.

Back then, London was engulfed by fire and violence for five nights in the summer.

“It’s far too early to look at what the ultimate outcome might be [of the 2024 riots],” Farrelly said.

“We are not in the midst of what we saw in 2011 – [that] was very instantaneous [and] it was very London focused to begin with.”

He said the most recent riots this year felt “more sporadic”, with there being “less of a focus” on London.

“What have we seen so far – certainly an uptick in riot claims,” he added.

“We have seen claims ranging from a few thousand pounds to the hundreds of thousands of pounds. So, there is a wide variety.”

Riot Compensation Act

While insurers will have their hands full, the riots in recent days also present a test for the Riot Compensation Act (RCA) 2016.

Large and medium business owners will likely need to rely on their commercial insurance policies for any single physical loss exceeding £1m, as well as for any business interruption loss.

But under the act, single claims below £1m will be ultimately assumed by local police claims authorities, with insurance companies able to seek recovery from riot damage through subrogated rights.

People who may not be adequately insured might also be able to claim compensation through the act, but those who hold insurance for property that is damaged or stolen in a riot must claim via their insurance company first before turning to the RCA should they need to.

Claimants have 42 days to make an RCA claim from the date the riot ended.

“The RCA gives victims of criminal damage or loss during a riot the right to compensation,” broker Marsh Commercial said.

“It is designed to allow communities to recover quickly from the impact of rioting.”

In turn, Marcos Alvarez, managing director of global financial institution ratings at Morningstar DBRS, felt that overall losses for the British insurance industry tied to the recent riots should be below £250m.

“We expect total insured losses from the recent UK riots to be ultimately manageable for British insurance companies given that claims under £1m per property can be recovered from local police authorities under the UK Riot Compensation Act 2016,” he said.

Evidence

While compensation can be recovered under the RCA, it is key that insurance firms are able to prove that a riot has occurred.

However, Farrelly said that there can be issues in this process, such as not having access to the damaged property.

“Is it safe to get to the site? Can we access the site? Are there police restrictions in place?” he continued.

“Public safety [is] a constant measure or element that we need to constantly consider and it is about gathering evidence quickly.”

However, he said that if a firm cannot get evidence from the site in question, there were various other ways to gather the material needed to verify a claim.

“You can look at footage from mainstream media, social media [and] you can look at CCTV footage,” Farrelly said.

He added that the insurance industry “was a force for good and we can demonstrate that in times like this”.

“We are there to help and we have the experience of previous events – in this instance, the riot claims of 2011 – to demonstrate the value.

“[Policyholders have] paid [their] premium – now it is over to us to demonstrate that we will play our part and deliver for you.”