Government plans to reform the Riot Damages Act could result in a huge fall in payouts to business owners after any future unrest and would leave most drivers unable to claim compensation, the insurance industry has claimed.
On the eve of the third anniversary of the outbreak of rioting in Tottenham, north London, the Association of British Insurers (ABI) said that had the planned changes to compensation been in place in 2011 only £1 would have been paid out for every £10 worth of damage.
Under the original 1886 act, businesses with property damaged in unrest can make a claim to the police for compensation regardless of their size; those without insurance apply directly, while those with cover are paid by their insurer, which then reclaims the money.
The new rules would stop compensation going to companies with a turnover of more than £2m – as well as not reimbursing their insurers. It would also stop compensation for loss of business.
The government’s consultation document shows that by June £60m in compensation had been paid for damage in the August 2011 riots, with 90% of that going to insurance firms. The ABI said stopping payments for larger businesses would force insurers to reprice for the risk of riots, which would lead to high premiums or excesses, or riot damage being excluded from policies.
There would still be payouts for damage to vehicles not covered by fully comprehensive insurance, but the ABI said this would leave 96% of motorists unable to claim.
And I don’t like it for a fairly fundamental reason.
The State claims the monopoly of legitimate violence in our society. That means that keeping the peace is the responsibility of that State. A riot is, obviously, a failure of that responsibility. That’s why damages from riots were paid for by said State in the first place: and I don’t see anything in that chain of logic that has changed to make us desire a different system. The police should stop riots. They didn’t: thus it’s the police rates that pay for the damage they didn’t prevent.
Incentives do matter after all. It’s not quite as good as taking the damages out of police pay but it’s better than no incentive at all.