Compensation to be paid by UK Government for Terrorist attacks on holidaymakers overseas

NCD News: We pay for it here, we pay for it there, we pay for it ... everywhere! - 14.12.08

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Compensation to be paid by UK Government for Terrorist attacks on holidaymakers overseas: In the wake of the recent terror attacks in Mumbai, a new system of compensation for UK citizens caught up in terrorist attacks whilst abroad is being drawn up. London law firm Lovells, who are "acting as an independent facilitator" between the British government and the ten largest insurers in the country "to provide British citizens who are victims of overseas terrorism with a level of compensation similar to that available if the incident had happened on UK soil".

The proposed new system would result in victims of terrorism occurring abroad receiving a state payout of up to £500,000, the same amount of compensation currently available to victims of terrorist attacks on home soil, and which was awarded to many casualties of the suicide bombings in London during July 2005.

The government already declared its intention to increase the amount given to overseas victims in 2006, but no extension has yet been forthcoming. The minister responsible for humanitarian assistance, Tessa Jowell, stated in a parliamentary debate that the situation of those British citizens involved in such incidents as the Bali bombings of 2002 or the Sharm el-Sheikh attacks of 2005, reflects poorly on the British government, particularly as numerous other European countries offer compensation for terror victims regardless of where they were affected. Nevertheless, the authorities plead that there is some difficulty in defining what comprises a terrorist action overseas, as opposed to a violent crime or political violence.

The stance of most travel insurers also seems to be ambivalent, with the policies of many mainstream travel insurers either failing to mention terrorism, (Legal and General, Direct Line and Staysure.co.uk) or specifically excluding terrorism from their list of possible claims (More Th>n and the AA). Cover against terrorism appears to be largely the preserve of specialist insurers such as Hiscox, the International Air Passengers' Association (IAPA), Clements International and Insuremore.co.uk.

Insurers will doubtless be relieved that the government is willing to take a leading role in compensating tourists hurt by terrorist actions in foreign countries, rather than increasing pressure on mainstream insurance companies to start offering cover against terrorism. This is because while the statistical chances of being caught in a terrorist attack are almost insignificant (you have far greater risk of death from obesity, smoking, being hit by a drunk driver, or simply falling down the stairs), payouts on a mass scale from terrorist attacks could financially ruin an insurer.

It seems that it is less of a burden to tax hard working people further to pay for overseas compensation than have insurers increase premiums for disgruntled holidaymakers.

At the same time, we doubt that any terrorism insurance provided by the government will be any cure-all. Anyone who's every claimed anything from the government will attest to the fact that the bureaucracy grinds exceedingly slowly: don't expect to have your tourist bus blown up in Colombia on Monday and get a government check for compensation by the end of the week.

Frankly, unless you're backpacking in Iraq or Afghanistan, it's extremely unlikely you'll be a victim of terrorism. However, if you are indeed worried about it, check the fine print of your travel insurance - especially the often vaguely worded lines about "war", "riots" or of course "terror". Specialist insurance against terrorism or kidnapping is also available. Bet you never thought you'd have to think about that before hitting the beach this year? †