UK - Employees killed in a terrorist attack are increasingly unlikely to be covered by any company insurance scheme, Watson Wyatt warns.
The consultant says insurers worldwide have been reducing their war and terrorism exposure since the September 11 attack on the World Trade Centre in 2001 by introducing exclusions or single event limits to cap the overall claim.
Watson Wyatt said it had found at least one exclusion in half the policies it examined for employee life insurance, health and disability insurance in 47 countries.
It also said that while the limits could be as high as £100m, this would not be enough to cover most firms.
For example, when Watson Wyatt examined one firm it found that while it had insured over 4000 employees, the £100m limit would only have been enough to cover 35 of its top executives.
Watson Wyatt said employers might be left without the cover they had promised and, should disaster strike, would have to bear the financial brunt on their balance sheets.
Watson Wyatt senior consultant Peter Eyre (pictured) said: “While such single event monetary limits may seem quite high – typically ranging from £50m to £100m – the limits could soon be reached if either lots of employees or a group of senior employees were killed.”
Eyre added that it was “quite common” for exclusions to apply even if the employee was the passive victim of an attack, and for insurers to try to extend the list of events that were not covered by policies.
“These limits are designed to cap the overall claim value from an undefined single event, typically by a fixed monetary limit, but they may not be confined to war and terrorism,” Eyre said.
“For instance the limitation could now extend to events such as natural calamities, earthquakes and flood, and to man-made calamities such as fire and aircraft accidents.”
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