Commenting on the likely impact of the UK riots on the insurance industry, Stuart Shepley, insurance partner at KPMG, sees underwriters focusing on inner city risks, with a review on premium rating for such locations.
Mr. Shepley, said: “In many respects incidents such as these highlight the importance for general insurance to safeguard against unforeseen events. This will also serve as a reminder to consumers of the need to understand the fine print of their policies.
“While there is a lot of speculation about what the total cost to the insurance industry will stand at, the reality is that it will take some time to get an accurate figure. While it will certainly be a significant number, the industry is in a position to be able to bear this cost.
“With regard to future pricing, it is unlikely that we will see overall premiums increase immediately as a result of the riots. However there can be no doubt that underwriters will focus on inner city risks and will review their premium rating for such locations. Hence, retail businesses and homeowners in central locations could see some adjustment in their premiums.
“Many high street brands have suffered major losses during the riots, which have come at a time when their businesses are already under pressure. As a result we could see increased usage of risk management tools such as captive insurers whereby retailers establish their own ‘in-house’ insurance companies for the purpose of covering their own assets. This will protect profitability for these retail businesses at the very time that it is needed and will have the benefit of reducing the impact of any short term change in the cost of insurance.”
KPMG in the UK is a leading provider of professional services including audit, tax and advisory.