The 2011 riots in the UK revealed shortcomings in outdated legislation concerning damages. Authors of new guidance explain how the new Act tackles these issues
DRIVERS FOR REFORM
Drivers for reformIn the event of a riot in the UK, policing bodies are treated as liable for the resulting damage to property, on the basis that they are responsible for maintaining peace and order. Until recently, the legal obligation to pay compensation to riot victims, whether individuals or businesses, and their insurers, was set out in the Riot (Damages) Act 1886 (RDA).
Following the riots in 2011, various problems were identified with how claims for compensation were handled by policing bodies, in the context of the RDA, which was archaic and out of date. These included:
- An overly bureaucratic process -- claims for compensation had be submitted within 14 days (with the government needing to step in to increase this to 42 days)
- Lack of clear definitions for 'riot' and 'compensation'
- Inconsistency in claims approach and outcomes between different police authorities
- Delays in settlement and refusal of claims.This assessment was reinforced and developed further by Neil Kinghan in his report, Independent Review of the Riot (Damages) Act 1886, published in November 2013.
This report led to a consultation by the Home Office on changes to the law, and the development of the Riot Compensation Bill, which was published in March 2015, and came into law as the Riot Compensation Act 2016 (RCA) in April 2017.
"In the event of a riot in the UK, police authorities are treated as liable for the resulting damage to property, on the basis that they are responsible for maintaining peace
CHANGES UNDER THE RCA
Changes under the RCAThe RCA broadly followed the recommendations made by Mr Kinghan, introducing the following changes:
- A cap on claim value of £1m
- 'Riot' definition to be linked to the definition in the Public Order Act 1986 (removing the terms 'riotously and tumultuously')
- For motor vehicle damage, riot victims are now entitled to claim, to the extent that they are not insured; this right does not extend to insurers
- Consequential financial losses will not be recoverable (this was previously understood to be the position in any case, although was temporarily in doubt following the Court of Appeal decision in MOPC v Mitsui Sumitomo)
- There is provision under Section 6 for the Secretary of State to put in place a Riot Claims Bureau, to deal with riots that span more than one police authority area, or where a police authority makes a specific request to the Secretary of State.
The Compensation Regulations 2017 were introduced in April last year to flesh out the detail of how the RCA will operate. Key points from an insurer's perspective include:
- Time limit for bringing a claim -- 43 days from the day a riot ends, with evidence to be provided within 91 days. These time limits apply to riot victims ('ordinary claimants') and insurers, with limited circumstances in which the time limit can be extended.
- Compensation calculated on the basis of reasonable cost of repair or reinstatement, or current market value for replacement items. Some insurers currently provide cover on a 'new for old' basis but will only be able to recover for possessions from the police on an indemnity basis.
- Participation in rioting or contributing to damage may lead to claims being decreased or refused. This is similar to contributory negligence in personal injury claims and may involve fraud in some cases. Insurers need to be aware that the actions of policyholders may impact their ability to recover from the police.
- Policing bodies can delegate authority to parties with the relevant expertise and capacity for claims up to the value of £25,000. It is expected that loss adjusters would be appointed in the event of a large-scale riot, despite caution about doing so in previous events, and this been reflected in the legislation.
RIOT COMPENSATION REGULATIONS 2018
In a subsequent development, the Riot Compensation Regulations 2018 came into force on 1 October 2018, making various amendments to the 2017 regs, including: In a subsequent development, the Riot Compensation Regulations 2018 came into force on 1 October 2018, making various amendments to the 2017 regs, including:
- An anomaly of Reg 4(2) of the 2017 regs was that insurers that covered both buildings and contents could claim separately for each, in effect raising the cap to £2m; this been removed, so that the maximum that can be claimed for one property is £1m
- Confirmation under Reg 9 that where a claim is partially declined by an insurer, the amount not recovered can still be brought as a claim against the police under the RCA
- Clarification on some minor points, such as to confirm that representatives acting for claimants are entitled submit requests to review decisions.
THE RIOT CLAIMS HANDLING BEST PRACTICE GUIDE
It is hoped that the new regulations will not be required in the future. In preparation for the worst, however, there has been some time invested into the production of a Riot Claims Handling Best Practice Guide by the CII New Generation Claims Faculty Group. This guidance was developed through collaboration with key stakeholders, including the Home Office, the Association of British Insurers, policing representatives, the Chartered Institute of Loss Adjusters and Mr Kinghan.
In the aftermath of the 2011 riots, the police faced an overwhelming volume of compensation claims, which had to be handled under outdated legislation. They had to manage core claims-handling functions such as assessment of liability, reserving, assessing quantum, methods and timeliness of settlement, insurer recovery processes,, communication and managing fraud.
The guide aims to bring the legislation to life, through setting out the core claims procedures and philosophy required for the handling of riot compensation claims, whether by policing bodies, a Riot Claims Bureau, or parties contracted out to handle the compensation claims (such as loss adjusters).
The New Generation team hopes the guide can be a practical point of reference for policing bodies, loss adjusters and the insurance profession, and that if a similar event to the 2011 riots were to take place, the riot compensation process will deliver better outcomes and experiences for riot victims.
It is anticipated that the guide will be published in November, alongside a report the New Generation team has developed, which includes recommendations on preparing for the operational challenges that the police will face in the event of a large-scale riot.
The key aims were to deliver improved outcomes for the public while maintaining the principle of treating claimants fairly through:The key aims were to deliver improved outcomes for the public while maintaining the principle of treating claimants fairly through:
- Efficient and fair claims handling
- Clear claims process for the claimant to experience
- Certainty in the outcome of claims
- Helping riot victims to get back on their feet following a traumatic setback.
Tristan Davison, Claims Adjuster, Markel; Kate Dobinson, Senior Claims Adjuster, QBE; Simon Forsdick, IFA, DHM Wynchwood; Patrick Hayward, Consultant, Altus