How Terrorism insurance can help with lost revenue

The client and the backstory

Our client is a multi-site fine dining restaurant business, with operations across London, including Borough Market.

On 29 November 2019, Usman Khan stabbed five members of the public, killing two at an event at Fishmongers’ Hall, which was for the benefit of rehabilitating and supporting previous offenders – Khan being one of them. On escaping the venue, he threatened to injure or kill more at London Bridge, close to Borough Market, until eventually civilians and police intervened. 

This was clearly an attack on human life, and there was little suggestion that the intention was to damage property or dent the revenue of nearby businesses. Many of those businesses would have had restaurant and hospitality insurance cover in place, and after an earlier terror attack in June 2017 which saw fatalities both on London Bridge and in eateries at Borough Market, a number of them would have also at least considered terrorism insurance.

Revenues impacted due to unmanageable circumstances

Following the events at Fishmongers’ Hall, as part of the wider ripple effect, our client suffered a downturn in income. This was due in part to the local authority of Southwark restricting access to the area, with public transport services reduced, which created an immediate reduction in expected footfall. And in turn, this unfortunately led to a £25,000 reduction in our client’s forecasted revenue.

How adequate and appropriate insurance helped our client

There are two essential factors to consider here that fall way beyond many typical claims for restaurant insurance, hospitality insurance, or even business interruption cover:

1. This was caused by an act of terror and therefore would only be covered by a terrorism insurance policy
2. There was no damage to the property. This is important because a claim for loss of revenue usually follows damage to property – and not often a nearby terrorism incident

In this case, pre-emptive measures and insight meant our client was thankfully as prepared as possible for this revenue dip. As part of their annual insurance review before the incident, we’d taken a deep dive into our client’s circumstances and background – including the earlier 2017 attack – so we recognised and highlighted future opportunities and reasons for a potential shortfall, thus advising our client to extend their terrorism policy to respond to events even when there is no damage to property.  

Claim paid within 72 hours

By being fully covered by terrorism insurance from Howden, the restaurant group not only had their claim against losses successfully met, but these were paid out within three working days.

From the moment Howden’s specialist Hospitality team took the call about the incident, our client was fully supported and informed, as we worked with them and their insurer to promptly and correctly submit a claim – thus ensuring they had the best chance of having their loss of expected income covered.  This claim settlement was paid within 72 hours of the terrorist event, helping the client avoid any financial pressure this interruption may have caused.

The finance director of the restaurant group said:

“This is great news. I wasn’t expecting to get any pay-out and definitely not as quick as this.”

Would your business insurance be enough to withstand an act of terrorism?

While this was reassuring for our restaurant client, at Howden, we continue to see restaurants, hotels and other UK hospitality businesses with no insurance protection beyond standard restaurant and hospitality cover, meaning they will have no protection if this type of terrorist attack happens again and affects trade.

Want to know more about how we can support your insurance needs? Get in touch with our Hospitality team on [email protected] or call us on +44 (0)330 008 1331