City properties to lose bomb cover
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Your support makes all the difference.THE Corporation of London, the local government authority that owns close to a third of City property, was told yesterday by Sun Alliance, its principal insurer, that it will not be able to renew its insurance against terrorist attacks.
The corporation, whose property portfolio is worth an estimated pounds 5bn, is one of the first large landlords to experience the problem, which is expected to threaten all large businesses over the next year.
Insurers are refusing to provide cover against terrorist attack because of the potentially huge claims. The risk was demonstrated by the estimated pounds 750m cost of the bomb that destroyed the Baltic Exchange in April.
Like the insurance industry, Bernard Harty, the corporation's chamberlain, who is responsible for finance, is looking to the Government to help by agreeing to pay for all claims beyond a certain level.
The corporation's insurance expires later this month. The only cover on offer from Sun Alliance is pounds 100,000 for each of three classes of claim on each premises. Others in its syndicate are adopting a similar line.
The Association of British Insurers yesterday described as 'seriously flawed' attempts by insurance brokers and industrial risk managers to try to put together a commercial solution to offer a modicum of cover. Mike Jones, ABI chief executive, said: 'It has been made abundantly clear that a commercial solution cannot be found.'
Even if the insurance market could produce pounds 250m of cover, this could be exhausted by a single bomb. 'We expect the Government to enter into a serious financial commitment to pick up this risk,' Mr Jones said.
Liz Taylor, who chairs the Association of Insurance and Risk Managers in Industry and Commerce, said: 'It's a shame that they're feeling negative.' Airmic intends to produce its proposals shortly.
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