Firms face terror cover crisis

AN EMERGENCY meeting was taking place today between the Government and leading representatives of the insurance, property and retail industries over billions of pounds of terrorism insurance cover under threat following the 11 September attacks in the US.

Contracts are coming up for renewal as early as April but the insurance sector fears it will be unable to continue providing cover without Government help.

The issue is particularly relevant for London-based companies, given the capital's global status and Prime Minister Tony Blair's open support for the anti-terrorist stance of US President George W Bush. One department store valued at more than £300m has already been refused cover in recent weeks.

The Association of British Insurers is asking the Government to extend the remit of Pool Re, a body set up after the IRA bomb at Bishopsgate in 1993. Under the terms of Pool Re, all British insurers put their terrorism premiums into one pot, which can then be used in the event of an attack. The Government acts as lender of last resort.

Pool Re has £1bn of funds and has never called upon the Government. But the organisation can only be used if damage is caused by fire or explosion. The ABI said this must be extended to damage caused by water, aircraft or contamination, such as anthrax. The insurance body is supported by the British Retail Consortium, the British Property Federation and the CBI.