Insurance · 10 November 2017

Government urged to protect small businesses against terror threat

Following a terror incident, Borough Market traders lost around £1.4m due to disruption
Following a terror incident, Borough Market traders lost around £1.4m due to disruption

Policy makers should urgently reform laws designed to protect small business owners from Britain’s “rapidly evolving” terror threat, according to an organisation representing the country’s small firms.

As part of a new report, the Federation of Small Businesses has outlined a series of recommendations that would support owners of small firms against terrorism, including greater insurance protection, emergency relief measures for those affected and awareness of existing resources.

The report drew on recent instances of terror incidents, including the Manchester Arena bombing in May 2017 and the London Bridge attack the following month, where local businesses in Borough Market were forced to close for 11 days, costing owners an estimated £1.4m.

FSB has called for reform to the UK’s existing terror cover safety net, Pool RE, which was set up in 1993 to ensure every company affected by terrorism would be fully covered by its insurer. However, the Pool Re system does not offer compensation for “non-damage business disruption”, such as loss of trade. The latest report has recommended an extension.

Relief measures detailed in the report included additional financial support for those directly affected, as well as allowing for payment amnesties to help ease cash flow and reduce outgoings. For example, the government could demand that utilities like banks and energy companies introduce a “flexibility clause” into supply contracts.

The report also called for a push to raise awareness within the business community of resilience planning, particularly with regards to the information and training material available via the police and on GOV.UK.

Announcing the recommendations, FSB chairman Mike Cherry said the ongoing terror threat demanded the best possible response “to limit the potential damage on local economies if the worst happens”.

“For a small business, the kind of disruption experienced in the aftermath of the London Bridge attack can be impossible to recover from. We need to review how we help small firms to bounce back from terrorist events so that if the worst happens, our communities can make a swift return to business as usual,” Cherry said.

Addressing the current insurance arrangements, Cherry suggested government ministers were aware of the limitations and called for them to respond to the “evolving terror threat”.

“Without this, small business livelihoods are at stake,” he added.

“Alongside this, giving business owners some extra time to pay the bills, as well as relief on their business rates, would go a long way towards helping affected businesses back on their feet and able to serve their communities as quickly as possible after a terrorist attack”.

Meanwhile, Julian Enoizi, chief executive of Pool Re, echoed Cherry’s words and said discussions with government were underway.

He added: “Small businesses should be given every opportunity to cover themselves against what can be significant business interruption that follows a terrorist attack, even when their own property is not damaged.”

Take a look back at our property protection series to help secure your business:

  1. Burglary prevention
  2. Limiting risk
  3. Security alarms

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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