The International Underwriting Association (IUA) has lent its support to a recent vote by UK motor insurers to mutualise risks for terrorism claims that will see the Motor Insurance Bureau (MIB) handle all claims for victims of vehicle-related terrorist events from January 2019.
All UK motor insurers are members of the MIB, a not-for-profit body that deals with the claims from victims involved in uninsured and ‘hit and run’ accidents, and which is funded through a levy arrangement.
Members of IUA’s Casualty Treaty Group raised concerns about the difficulty of quantifying and pricing vehicular terrorist risks last year, warning that unlimited exposure from a single event could fall to just one or two reinsurers.
Chris Jones, Director of Legal and Market Services IUA, said: “The mutualisation of motor terrorism risks promises an effective answer to a market problem that IUA members have been concerned about for some time.
“Our Casualty Treaty Group has liaised closely with the Motor Insurance Bureau and the Association of British Insurers as the solution has been explored and we look forward to a detailed arrangement being operational soon.”
MIB has also said that, following the vote, it plans to explore the possibility of reinsuring some of the liability to reduce its exposure to terrorist incidents.
The decision to mutualise risks was passed by a majority of 75% of MIB members and Article 75, the relevant element within MIB’s Articles of Association, has now been changed to bring the new liabilities within the scope of claims paid by the Bureau.
Jones continued: “The vote is the culmination of industry wide effort on an issue that impacts all facets of the market. It represents an imperative solution to ensure that innocent victims of motor terrorism incidents continue to receive the full compensation they deserve, in a way that is manageable for the (re)insurance market. This approach mirrors other schemes throughout Europe and is fully supported by the IUA.”
