Terrorism reinsurance

Counter-Terrorism and Border Security Bill – in a Public Bill Committee am 3:45 pm ar 3 Gorffennaf 2018.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark 3:45, 3 Gorffennaf 2018

I beg to move amendment 45, in clause 19, page 19, line 20, leave out paragraph (b) and insert—

“(c) the use of a motor vehicle during acts of terrorism; and

(d) any loss which falls within subsection (1A).””

This amendment would ensure that personal injury sustained as a result of the use of a motor vehicle during acts of terrorism would be covered by terrorism reinsurance arrangements.

It is a pleasure to serve with you in the Chair, Mrs Main. The explanatory notes speak for themselves: the amendment would cover vehicles used in acts of terrorism. I will speak to several amendments to the clause, and I should explain at the outset that this is almost wholly driven by the experience of all those people and businesses affected by the London Bridge and Borough market terror attack in my constituency on 3 June last year, which saw eight innocent civilians murdered in a brief but brutal assault on a vibrant, positive and dynamic part of our capital and my community.

The cowards who chose this area knew that it would be full of people of all ages enjoying an evening out. They knew it played host to tourists from all over the world celebrating everything that London has to offer in terms of food and drink. Its impact was universal, and I will say more about the outcome, because despite their vile intentions, we have seen a new togetherness and a new sense of community. I will speak about that later as I bring forward further amendments.

I would, of course, like to say much more about the attack and its aftermath, but for now I will make just two additional points linked to the amendment. First, I would like to thank the police and emergency services again for their truly heroic efforts that evening. The swift action of paramedics meant that many lives were saved, including those of the people who were hit by the vehicle on the bridge and those who were attacked with knives in and around the market. Those who ran trauma centres deserve huge praise in particular.

The swift and even more heroic action of police officers deserves mention too. They ended the attack before more innocent lives could be taken, with officers taking huge risks, and some interventions resulting in life-changing injuries for those involved. I mention just one: PC Wayne Marques was very badly affected, and I thank Southwark cathedral for acknowledging his efforts in a very novel way. He is believed to be the first living model for a corbel for the cathedral, which was unveiled at the commemorative service last month. If anyone would like to know what a corbel is, they are more than welcome to visit. I am no architect; a real amateur would call it something akin to a gargoyle, but that is very much not what it is—it is a supporting structure.

When I was first elected in 2015, I was warned by security officers that my constituency was more likely to be attacked by terrorists because of its location, attractions such as the Shard, the Globe theatre and the Tate, and the six million tourists who visit, and because of the potential global impact. Sadly, there is also the potential to grow an attacker—to have someone living or brought up in our area who attacks or tries to attack others. Sadly, both those things have to come to pass in just three years.

Thankfully, a potential attacker was thwarted by his own ineptness in attempting to target commuters on the Jubilee line, and he is now in prison thanks to the police and security services. The horrific events of June 2017 were an even greater shock, but they also revealed weaknesses about how we respond as a country and how we try to protect people and businesses in the event of attacks involving vehicles and knives.

I will outline some of those weaknesses as we scrutinise clause 19, starting with motor vehicle use in attacks. This is a probing amendment, as I have made clear from the outset. I am aware of cross-party interest and conversations on this matter, and I understand that the hon. Member for North Dorset had a meeting on this issue this morning.

It may surprise some Members to note that the Government-backed pool reinsurance system has existed since 1993, and is designed specifically to cover acts of terror—those incidents causing significant damage to our country, people and physical infrastructure. Since 3 June 2017, I have been amazed at how its presence and potential to support those affected by terrorism has been somewhat muted by the Government and the Treasury in particular. Instead of adapting it and ensuring swift access to help in the event of an act of terror, the Treasury has squirreled it away and designed new and more complex systems to compensate individual victims or groups of businesses affected by terrorism.

There are so many different pools of support, depending on whether someone is hit by a vehicle, stabbed or targeted with explosive devices, and each has different levels of support and ease of access. Nobody can or should be expected to know all of them in advance of an attack affecting them. That is the case with motor insurance.

I should thank all those involved in the sector for their advice and briefings since last June for the various meetings and events I have held or participated in—the British Vehicle Rental & Leasing Association and Thrifty are just the latest two.

Sadly, rental vehicles have become a choice of weapon, and the sector is very worried about what is happening as a result. Twenty-three thousand businesses are involved in renting vehicles, with 5 million vehicles on UK roads covering 3 million jobs and providing an estimated £150 billion to our economy. It is a significant sector and one that we should ensure is not harmed by terrorist aims or actions. The amendment and the Bill offer that chance.

The sector is taking action, including better screening of people seeking to hire vehicles. Members of the sector are making strides, but they were very disappointed not to receive replies to correspondence with the Treasury in April that outlined their concerns. I hope the Minister will nudge his colleagues in the Treasury for a reply, albeit a delayed one. No nod is forthcoming, but I hope that will happen.

We cannot pretend that the sector can resolve this alone. With the best will and policies in the world, it would not be able to deter the most hard-minded terrorists. Even if the private rental sector could stop all hiring of vehicles for this purpose, the second-hand sector might become the sector of choice for those seeking vehicles, so it is important to ensure that the market works for the private rental sector and that the terrorists do not win by changing how we work or the availability or cost of rental vehicles.

Signs of failure are already emerging. On opening for bids to reinsure its fleet, one major car rental company, which wishes to remain anonymous, found that two insurers immediately withdrew from offering cover specifically because of

“concerns regarding potential terrorism exclusions on reinsurance treaties”.

A further insurer offered only part-cover with a significantly raised self-funded retention figure. Those risks are there.

There are several reasons for the withdrawal of former help and for the changes. Rental operators are required to have motor insurance and cannot trade without it. When a vehicle is used for terror, the company that rented it out has unlimited risk liability. That is new—it has been the case only since a judicial review in 2017. Before that, the criminal injuries board paid compensation, although it was not unlimited. The CIB still covers attacks not using vehicles, and the limit is £500,000. Those changes—the rise in the threat and the forms of attack that have taken place on Westminster bridge, at Finsbury Park and in my constituency—are causing great fears. This is a global phenomenon. When a truck was used in Nice in July 2016, the collective damages were more than £500 million. The sector is very anxious. There are threats to withdraw cover from 2019 without urgent action. Small and medium-sized enterprises in the sector will be affected to an even greater and swifter degree from as early as next year, but the amendment potentially offers a solution.

A more agile Treasury might think to use Pool Re as a permanent rule, as supported by Zurich in its letter to the Committee, in which it flagged up

“building a new model to fund a uniform compensation mechanism; and devising a holistic approach for compensating and rehabilitating victims of terrorism.”

Pool Re exists for that very purpose and since 1993 has paid out about £630 million in relation to, I believe, 13 incidents. Instead of taking that approach, the Government appear to be inventing new and different compensation schemes to cover different kinds of losses. It is an out-of-date system and should be overhauled. Pool Re is the obvious model to offer more universal protection. In Australia and Austria, it is the norm. In France, Spain and Italy, insurers are also mandated to pay into a Government-backed scheme, akin to Pool Re.

Given the points I have made, hon. Members may wonder why this is a probing amendment. That is because there is another means of addressing some of the concerns. The Motor Insurers’ Bureau is the sector overseer, for want of a better term. Every insurer underwriting compulsory motor insurance is obliged by virtue of the Road Traffic Act 1988 to be a member of the MIB and to contribute to its funding. The MIB consulted its members on their views about mutualising risk from injuries resulting from acts of terror, and a vote is under way on adopting proposed changes. If the MIB vote fails to address insurers’ concerns, market failure beckons and a Government-backed approach may be the only option. An indication from the Minister of the Government’s thinking and plans for action in the event of that failure would be very welcome and could reassure many of the businesses affected.

The Minister’s views would also be welcome. Even in the event of that vote passing, the Treasury will be asked to convene the sector—the British Vehicle Rental and Leasing Association, Road Haulage Association and Freight Transport Association—to work on a new system that does not overload businesses and industry. Whatever the outcome of the vote, the Government will have a role in shaping what comes next.

Timing is crucial. By the time the Bill reaches its next stages and the House of Lords, we will have the outcome of the vote, and preliminary discussions involving the Treasury and the sector will have occurred. The amendment may not be needed a few months down the line, hence its probing nature. However, in the event of vote loss or discussions calling for greater Government involvement, the Pool Re model is on the table through this amendment and discussions now. I look forward to hearing the Minister’s reply.

Photo of Simon Hoare Simon Hoare Ceidwadwyr, North Dorset

I do not wish to detain the Committee for long, not least because all the copious notes I took from the meeting that the hon. Gentleman alluded to seemed to go missing in the lunch recess. Perhaps we should be more concerned about our security and counter-terrorism than anything else.

I want to support the probing nature of what the hon. Gentleman just said. The licensed vehicle fleet is very large and represents a significant percentage of new car sales in the UK. We know full well the huge importance that the automotive sector has for our UK economy.

It is also an important part of our UK tourism sector. Lots of people live in our big towns and cities because there is good transport and they do not require to run a motorcar. However, they want to go on holiday in the United Kingdom with their kit, their kids and everything else, so they hire a car. We also want to ensure that foreign tourists who are here on a UK-only destination or as part of a wider European tour have access to a vehicle.

As we know, insurance is a pivotal measure that vehicle rental companies must have. The hon. Member for Bermondsey and Old Southwark alluded to the huge problems that that can create when trying to find insurance. That seems to be a difficulty not just for the larger players in the sector but smaller business. Businesses large and small create a significant number of jobs.

The hon. Gentleman referred to the ongoing consultation on the vote. One hopes that that will address the issue. As the Bill progresses towards Report and processes in the other place, I urge my right hon. Friend the Minister that it is a timely trigger for a more intragovernmental conversation about how our mature and well respected insurance sector considers altering its products and remit, and how it looks at requests for insurance in sectors that are prone to claims, which are themselves hard to define. Vehicles would obviously be one of those. There seems to be a time lag between the mindset of the insurance sector and what today’s modern business requires.

A constituent is having to claim on his domestic insurance for loss of possessions as an indirect result of terrorist activity. His insurer has told him, “Terribly sorry; you are not covered.” Lots of other sections, be it Government, police, security and so on, have had to recalibrate a lot of what they do in order to face these new challenges. That is what we are trying to do in the Bill. There is a time lag in some elements of the insurance sector, so I support the hon. Gentleman.

Photo of Anne Main Anne Main Ceidwadwyr, St Albans

Order. Before I call the hon. Lady, I was about to make the hon. Gentleman come back to motor vehicle acts of terrorism. I would rather that did not involve wider discussions of insurance. If it is not on a wider discussion of insurance, I call Rupa Huq.

Photo of Rupa Huq Rupa Huq Llafur, Ealing Central and Acton

I want to make a parallel. The hon. Gentleman referred to a time lag. When there were riots in my constituency in 2011, the Riot (Damages) Act 1886 was not fit for purpose.

Photo of Anne Main Anne Main Ceidwadwyr, St Albans

Order. The hon. Lady is now coming on to clause 19, which is about delays.

Photo of Rupa Huq Rupa Huq Llafur, Ealing Central and Acton

I wanted to say that the Riot Compensation Act 2016 tidied that up. It would be good if that were considered in some form.

Photo of Simon Hoare Simon Hoare Ceidwadwyr, North Dorset

I was drawing my remarks to a close. I am not going to speak to all of the amendments, conscious of your injunction, Mrs Main.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

It is not just a time lag, although that is part of the problem. The insurance sector takes the same approach as the one that led to Pool Re, being conscious of the fact that the cost they could incur are much higher as a result of the judicial review last year.

Photo of Simon Hoare Simon Hoare Ceidwadwyr, North Dorset 4:00, 3 Gorffennaf 2018

The hon. Gentleman makes an apposite and valid point. My right hon. Friend the Minister will have heard it. I concur with it. I will not rise to speak in support of the probing nature of the hon. Gentleman’s other amendments, but I hope my right hon. Friend the Minister has taken the point about the need to talk to the Treasury and others responsible for City and insurance matters to ensure that we have a sector fit for purpose to both meet the security challenges and also—I see Clerks waving their hands as if I am saying something completely outrageous; I am not sure why. The Minister has heard what we have had to say.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

I am very sympathetic to the aims of the amendment, and the clear issue that people who are going about their business not thinking about terrorism become victims. They run small businesses, and then without much ado they go through the terrible attack that we saw on London Bridge. Visiting people was amazing, and I pay tribute to the courage and bravery of the constituents of the hon. Member for Bermondsey and Old Southwark. When individuals cut across the bridge and ran into people, the first thing the public did was run to help. The best of humanity came out that night, and also some of the worst. Not content with murdering people who came to help, the terrorists then embarked on an attack in Borough market, and we saw unarmed people challenging them and doing their best to make sure that they were not allowed to go any further. Then the police came and took very strong action.

I understand what the amendment tabled by the hon. Member for Bermondsey and Old Southwark seeks to do, but I have to point out the difference between Pool Re and other insurance companies. Pool Re effectively insures insurers. It is not a customer-facing organisation where we make a claim against it. Individuals make a claim to an insurance company and that company goes to Pool Re, and under certain conditions the claim is paid out. The hon. Gentleman’s amendment would slightly change that relationship.

The amendment also does something that has been alluded to by Opposition Members. Our difference of opinion is about timing. The MIB, the Motor Insurance Bureau, is having a vote as we speak—a postal vote. Can we, as a Government, say to them, “Don’t worry, we’ll step in. Don’t worry about mutualising your risk”? That is ultimately where most countries solve that problem. It is where many other issues around niche insurance—it is pretty niche—is dealt with. The insurance industry mutually insures the risk out of its profits. I am often slightly frustrated by the insurance companies, but we should not forget that the risk of being involved in terrorism is tiny. I have raised this before. One by one, travel insurance companies have dropped covering counter-terrorism. The risk of it is very small and therefore the impact of standard cover for terrorism on profits will be minimal.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

I appreciate that the risk to the individual of being involved in an attack is minimal, but we have been here before. The reason for Pool’s existence is the astronomical costs to insurers, as we saw in the case of the Provisional IRA attacks in the early ‘90s targeting physical infrastructure and not individuals. There were huge costs that the insurance market said it could not be expected to cover. That is why Pool exists. We are seeing a similar position emerge in motor insurance potentially, and the Minster is taking a slightly complacent attitude to that. If we saw—I very much hope we do not—a Nice-style large vehicle attack on civilians, those costs would be there and the insurance market would collapse.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

That is why our preference is for those companies to mutualise their risk through their profits. As I said earlier, our challenge is perhaps a difference of opinion on timing. The MIB is having this vote, and if the Government were right now to indicate, “Don’t worry, we will take it out of Pool Re,” those insurance companies would feel less compelled to vote to mutualise that risk, not more. The Government will, for now, maintain the view that we step in when something is uninsurable and at the extreme of market failure. I do not think that now is the moment to indicate that somehow the MIB can pass it on to the system.

The hon. Gentleman refers to catastrophic losses and scale. Pool Re already covers that large pool of loss, to some extent. I would be interested to see the insurers’ calculations of the actuarial risk, if we extended it to personal injury through motor vehicle. Whether we like it or not, the catastrophic costs of the big IRA bombs, for example, were because of the scale of the truck bombs, which led to the sealing off of large parts of city centres of high retail value and high-expense property. That cost is extreme. He talks about Nice, but the current indication is that that scale of threat to people and personal injury is still very rare. The Government’s position is, therefore, that we would like the industry to mutualise that risk.

At the same time—this is good news—we are moving in the Bill to ensure that loss of business is covered by Pool Re. When areas are shut down, we think Pool Re has a role to play in that, and not enough has been done by the insurance companies. Perhaps it is a matter of timing that divides us, rather than what we both want to achieve. I will get on to timing at a later amendment. I am slightly thrown, because I think the timings have changed for the Committee.

Photo of Paul Maynard Paul Maynard The Lord Commissioner of HM Treasury

If the Minister wishes to move to adjourn, he is more than welcome to.

Photo of Anne Main Anne Main Ceidwadwyr, St Albans

No; it is the Whips who will decide.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

I hear hon. Members’ concerns, but for that reason, and to see where we get to with the MIB and its vote, I ask that the hon. Member for Bermondsey and Old Southwark does not press his amendment. We will explore what more can be done. I understand the concerns, especially about vehicles being used as weapons. I believe that our insurance companies, which are on the frontline in their relationship with customers, should deal with this risk. The Government should step in only if those companies fundamentally fail to do so.

Amendment, by leave, withdrawn.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

I beg to move amendment 11, in clause 19, page 19, line 27, at end insert—

“(c) the acts of terrorism referred to in paragraph (b) occurred on or after 1 January 2017”.

This amendment would mean that the extension of terrorism reinsurance arrangements to losses that cannot be directly linked to physical damage would apply to those businesses that had financial losses due to terrorist acts occurring on or after 1 January 2017.

Key to this amendment is the backdating of extended coverage, which the Minister has just referred to, to 1 January last year, to cover business interruption rather than just physical damage. Speaking to each amendment separately gives me the chance to thank everyone involved, and I thank the Clerks for their advice and support. We should at least ensure that this amendment is watertight. I also thank the Borough Market Trust for its information and advice and the way it has held the community together with the support of United St Saviour’s in the past year, including by distributing donations to those most in need locally, in the absence of the coverage that this amendment is designed to achieve.

As I have mentioned, I never expected to be involved in terror insurance issues when I stood for election in 2015. Most of us assume we will never be affected by a terror attack. The Minister has just said there is a tiny chance of our being involved. Most of us also assume that the Government have systems in place to ensure that people and UK businesses are protected as far as possible from such events happening, and that if terrorists do get past, the efforts of our excellent security services and dedicated police support will be available.

We also assume that, whoever is in charge, the Government will act in our best interest and ensure there is adequate preparation for future attacks. Sadly that is untrue, given the nature of the attacks we now face, warnings about the types of attacks being witnessed, and inaction by the Government on having protection in place despite two and a half years of alerts about the changing nature of terror in the UK—the targeting of civilians with vehicles and knives. The attack at London Bridge and Borough market exposed the gap that has emerged, despite the Government’s awareness of the matter.

The example given on page 30 of the explanatory notes is Borough market:

“The extension of the terror threat to cover not only bomb attacks causing physical damage to commercial property but also the use of vehicles and knives targeting individuals has led to a gap developing in the cover that Pool Re offers. In the case of the June 2017 terrorist attack on Borough Market, there was limited physical damage…but traders lost business as a result of the week long closure of the market to enable the police to investigate the crime scene. As the losses incurred by Borough Market businesses were not consequential on physical damage to commercial property, any terrorism-related insurance backed by Pool Re and held by those businesses may not have covered such losses.”

So the Bill would extend coverage to provide better help to employers affected by future attacks, but it offers nothing to the 150 businesses in my constituency that were hit last year, despite the fact that the market is used as an example and justification for extending the new coverage. The amendment would helpfully backdate coverage so that the example given would also be covered by the Bill.

The 150 affected firms assumed they would have protection, because of that tiny chance. They also assumed that the language the Prime Minister used, saying that the terrorists would not win, meant that assistance would come to stop terrorists costing firms, jobs and our way of life in the area—and well beyond it, given the nature of Borough market’s suppliers across the country and internationally. We have had 13 months of ministerial visits and meetings, but nothing has been offered. My amendment is designed to change that and offer some of the affected firms extra help in the absence of Government direction or action.

The attack last year was over very quickly, thanks to police attendance, but eight minutes of attack led to a closure affecting the market and the area for 10 days. It affected 150 businesses and it cost £2 million. The consequences were colossal. In some cases there was physical damage. I have been through the accounts of some of the affected businesses. In that limited pool, which is a range of tourist attractions, traders and restaurants, physical damage was the smallest part of the damages. It included damage to doors, and the vehicle damage on the bridge. I have seen about £26,000 of damage in the accounts.

A second category was produce. The market is not just somewhere for people to pick up bits and bobs. There is tonnes of produce there, supplying the restaurant and hotel sector for miles around. Stock loss accounted for about £84,000 in the handful of accounts that I have seen. Staffing was another business interruption loss that could not have been predicted. People who witnessed the attack, or knew it had happened in their workplace, chose to leave. The recruitment costs for the employers accounted for about £86,000 in that limited sample. There were also income losses. Contracts to supply other firms and restaurants were lost, and so were bookings, including at the Golden Hinde. That amounted to about £400,000.

I read out some specific examples on Second Reading and will not go through them all, but a case in point is Turnips fruit and vegetable distributor, which lost almost £100,000. Aviva has not paid out despite repeated requests to reconsider. There are good and bad guys in the insurance world. The NFU came across well in its response to local businesses, although it did not cover all costs involved. I should add that some firms are still battling with insurers more than a year later. One small trader said “We keep trying” to secure payments; some had parts of claims paid. One tourist venue has a £40,000 shortfall, and is still seeking more. Some felt under pressure—both from insurers and because of business need and the impact of the attack—to accept what they were offered. One specialist alcohol producer and supplier stated that insurers had made an offer it was “obliged to accept”. The amendment could help to change that, ease the pressure and resolve outstanding issues.

I should add that others had extended terror insurance cover, including one tourist attraction and one restaurant with £200,000 of damages, which is now in dispute with its insurer over the full costs. The amendment would backdate coverage and act as an extra urge on both Pool and individual insurers to provide more flexibility and direct support.

Traders and others have shown me correspondence with insurance companies. When they took their insurance out, some of them were advised not to take out terror insurance as it covered only physical damage, which they were unlikely to need. That left exposure—needlessly, had business interruption been included sooner. The amendment is an opportunity to offer some extra help, at least to those who held terror insurance.

Consider different responses with the same rationale as this amendment: public donations of £100,000; Barclays offering office space; business donations matching public support; News UK and Mergermarket, a financial news specialist, offering vouchers worth £40,000 to their staff to use at the market; the London Borough of Southwark providing rates relief of £100,000; the Borough Market Trust waiving rents; and Sadiq Khan at City Hall freeing up close to £300,000.

The Government have offered nothing. Even now, 13 months on, in this Bill and with this amendment, nothing is being offered. Ministers have come and gone in this place, including the Prime Minister, the Home Secretary, Business and Treasury Ministers. Not a penny has reached the people or firms affected. We could help now; the amendment offers that chance.

The Government’s update to the Pool system is welcome, but where is the help for those who suffered from Government inaction? Consider those firms with email chains explaining why they did not take out insurance, why they declined it, why it would not pay out, and why they were right in the light of the attack itself—not because they did not want terror insurance, but because the Government failed in their duty to prepare and cover, and to ensure that the gap was closed when they were first warned some years ago.

I welcome the Government’s clause to close loopholes for firms, areas and MPs affected in future, but there is an issue of responsibility here. I find it offensive that the explanatory notes to the Bill suggest Borough market as reason for change without addressing the impact on my constituents and the firms in my local area. The Government are twisting the knife 13 months after the attack, having suggested they cared but delivering nothing practical to help. My amendment would address that.

I hope the Government reconsider this matter now and allow 1 Jan 2017 to be the start date. That support is still needed. If it had not been for public support, firms could have gone under, and jobs and Treasury revenue could have been lost. It is the Government’s responsibility. They failed to prepare, but there is a chance to rectify that failure now. There is no new cost to taxpayers or to the Government. Pool and insurers can be persuaded to cover it.

I ask that the Government extend coverage to 1 Jan last year, to retrofit the extension of cover. I hope that the Minister will be sympathetic. If Ministers are unable to work with this very limited amendment, the Government must show what they will do. Will they produce a different means of reflecting on the losses and supporting those British businesses to ensure that terrorists cannot win? Will the Treasury build in a new cost to the public purse—a new compensation system—that ignores the viable alternative that is available now? I look forward to the Minister’s response.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security) 4:15, 3 Gorffennaf 2018

I listened to the passion that the hon. Member for Bermondsey and Old Southwark has about his constituency. I have heard similar passion from my colleague Lucy Powell, who also argued for such things after the arena attack.

I understand the challenges that businesses—especially small businesses—have faced, but this is one of those moments where the Government have to say difficult things. Retrospectively changing the terms of insurance would go far wider than the hon. Gentleman’s constituents. If we put in law a retrospective date, the unfortunate consequence would be that we would all pay—not for the particular issue that he has raised, but by adding risk to the insurance market, which is obviously what insurance products are based on. Insurance would never know whether at any moment the Government of the day might change the risk and table an amendment to set the date back in time. If it was not 1 January 2017, it could be the bomb damage we have seen over decades. Where would we draw the line?

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

As the Minister suggests, we draw the line at 1 January 2017 to acknowledge the unique circumstances faced by people who experienced terror attacks in our country last year, and the unique failure of the Government to address a gap that they knew about in advance.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

I dispute the hon. Gentleman’s view of our failure to address the gap. If someone is a victim of another terrorist attack—even one that happened five years ago—they would quite rightly see it as completely unjust that their event, their damage, their loss of business or their injury was not deemed important enough to make it into the deadline of 1 January 2017. I spent my early life in places that were bombed and blown up, and I spent my early career with victims of terrorism. When I meet them, even to this day, they hold that loss to them personally. To say to them, “Yours isn’t valid, but others are,” would be deeply unfair.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

But with respect, the Bill specifically deals with Pool Reinsurance and the Government’s extension to cover business interruption. That is all we are dealing with and that is why 1 January 2017 makes sense, as the amendment proposes.

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

The Government’s proposal in the Bill is about the future. It is about recognising, because of the lessons learned from attacks such as Borough market and the Manchester Arena, that the type of attack we are seeing now is having a major impact on business continuity and that the terrorism insurance market does not cover that enough in some areas. That is why we are taking action.

I wish I could do something about the past, and about people who did not have insurance or whose insurance companies were unreasonable, but the principle of the Government retrospectively putting that type of legislation in place would, I am afraid, have a significant impact on the insurance markets. I do not mean on their profits; I mean on us, as customers, who would understandably feel the change in risk profile. There are lots of other examples of losses, which are perhaps not as tragic as terrorism, but for which the constituents of many hon. Members would seek to claim for retrospective loss. It is not that I disagree with trying to help the victims of terrorism. It is just a simple fact about how our insurance market and the private sector work.

The principle of retrospective legislation means that it will not be possible for us to accept the amendment, not least because it raises the question of who would go and talk to all who were victims of terrorism in 2015, 2010, 1998 or 1992, when I lost 30% of my sight—would I get retrospective insurance? I am afraid that that is just the way we try to frame our legislation. The Government do not seek to denigrate people’s experiences in Borough market by saying no, but we must accept the way the insurance market and risk work. We seek to deal with that by trying to head off the problem in the future, but we cannot do it retrospectively for the last year.

Where we can, and where there are requests for financial assistance, I am happy to listen to the hon. Gentleman and help him to champion that cause, if he feels that he has not got any money for Borough market from the Government. I did the same for the hon. Member for Manchester Central and for Andy Burnham to ensure that we got the money for Manchester in that bigger pot and that No. 10 understood the importance of it. I am happy to take that on board.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

Again, that comes back to the point and purpose of Pool Reinsurance. We have the system and funding in Pool Reinsurance to cover that event and others like it. Why would the Minister suggest a new compensation, a new tax, a new use of public money, a new job for the Government and new civil servants when there is an existing system that the amendment would allow to help to cover?

Photo of Ben Wallace Ben Wallace Minister of State (Home Office) (Security)

Pool Re insures insurers. Because of the way in which Pool Re works, the amendment would effectively intervene in existing contracts made between insurers liable for additional risk, and customers. It is not customer-facing insurance; it is not a state version of Aviva or anyone else. That is one of our biggest challenges.

There are cases in which the Government seek to use grant money to help business rate relief. We gave money to Manchester, as I think we will to Salisbury, to help tourism, to help it get back on its feet and a whole load of other things. I think we gave Manchester £23 million to deal with that.

As the hon. Gentleman alluded to, some insurance companies have been quite helpful, but not all of them; some have paid out outside their remit. I agreed with him on Second Reading in hoping that Aviva would respond with flexibility. It has since written to me to say that, contrary to my comments, it had been flexible and paid out, even for people who did not have that part of terrorism insurance—although I do not think that affects people who did not have terrorism insurance. However, I should certainly put on the record that Aviva says it has been flexible.

The Government cannot retrospectively interfere in contracts between insurers and customers, which would be the amendment’s effect. I am afraid that is why we can only try to deal with this for the future. By doing so, we will hopefully make sure that future events like that at Borough market have a minimal impact on people and that the terrorists do not win. While I do not think it is likely, I urge the hon. Gentleman to withdraw his amendment. I hope he understands that this is not about motives, but simply about the structure of the insurance market and the Government’s relationship to retrospective legislation.

Photo of Neil Coyle Neil Coyle Llafur, Bermondsey and Old Southwark

In the debate on the last amendment, the Minister seemed to say that insurers need to up their game. On this amendment, he says that insurers must resolve again, despite there being outstanding claims. My constituents will note the Government’s muteness about their ability to help and to step in, even through this very limited amendment.

I cannot say that I am happy to withdraw my amendment at this stage, but I am hopeful that the Government will reconsider it as the Bill progresses. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Paul Maynard.)

Adjourned till Thursday 5 July at half-past Eleven o’clock.

Written evidence reported to the House

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CTB 07 Zurich Insurance