Skip to main content

New UK Counter-Terrorism and Security Bill impacting insurers and reinsurers writing Kidnap and Ransom cover

On Monday 24 November UK Home Secretary Theresa May announced an amendment to the 2000 UK Terrorism Act, the Counter-Terrorism and Security Bill.

Thu 27 Nov 2014

The legislation is being introduced in light of the escalation of the UK’s terror threat level from substantial to severe earlier this year. The bill looks to prevent radicalisation, strengthen TPIMs (Terrorism Prevention and Investigation Measures), and to grant the government greater powers to disrupt and control people’s movements across borders, improve border security, to close down at least part of the communications data capability gap and establish a new independent privacy and civil liberties board.

Impact on the insurance and reinsurance industry

As far as the insurance industry is concerned, the bill will make it an explicit offence for insurers and reinsurers to reimburse ransom payments made to designated terrorist organisations and individuals. Theresa May announced that the bill will serve as clarification of the law around Kidnap and Ransom insurance. Once the Bill is introduced, a new offence will apply to ransom payments. The Home Office says it hopes this amendment will discourage insured companies and individuals from making payments in the belief they will be reimbursed. 

Implications for the Lloyd’s Market

Lloyd’s and the London Market have been in dialogue with the UK government concerning this issue for some time now. The Bill is unlikely to have any practical impact on the Lloyd’s Market, as UK insurers, like any other UK "person", are already prohibited from providing funds to terrorists.  The new bill will remove the ability for insurers to be able to refund a person or company who has paid a ransom to a designated terrorist organisation.  The law, up to now, has been ambiguous on the legality of the reimbursement of ransoms paid to terrorists and this bill is therefore looking to clarify that – although there has not been any indication that Lloyd's underwriters have ever made such a payment.