Pool Re undertook a case study[1] into the impact of the Manchester Arena attack on small businesses in the area. The study also investigated what, if any, protective measures in terms of insurance, businesses were aware of. Research revealed that some businesses suffered significant disruption, and the attack gave rise to several key considerations for insurers.
There were 19 businesses caught within the inner cordon following the attack and widespread closures affected businesses for at least two days. Businesses that were more exposed to the Arena saw a reduction in their trade as a result of the Arena closing for several months. Those who derived income from the Arena saw footfall and trade decrease. Indeed, some reported that the level of business was still not back to pre-attack levels due to a loss of attraction and footfall. There were examples reported of unforeseen costs incurred and operational disruption. The need to support staff both emotionally and practically following the attack was underlined, with concerns in some cases only becoming apparent weeks afterwards. Business interruption did not affect businesses exclusively, there was also evidence of implications for subcontractors and other parties reliant on the businesses.
One of the most striking results of the study revealed that the first 48 hours following an attack are decisive for businesses. The Arena attack caused significant widespread disruption and those inside the cordon were closed completely for the period of initial investigations. Businesses expressed that support needed to be quick, direct, well-designed and sensitively delivered to meet their needs. Small businesses operating on tight margins in fiercely competitive retail or catering sectors described how a few days denial of access could send them under. In the face of this there was no scope for anything other than the urgency of reopening.
43% of businesses interviewed had no continuity, disaster recovery or crisis plan in place. Small businesses, who lacked the resilience of larger organisations, found the consequences were profound, and few had any crisis evaluation processes in place. Even fewer had had conversations about terrorism insurance cover. In some cases, businesses reported that they thought they would be covered by their existing insurance but found out post-event from their insurer that this was not the case. The Federation of Small Businesses (FSB) suggested there was a gap between expectations and reality. An article produced by First Voice of Business, stated that although SMEs, with tight budgets and small cash reserves, would be hard hit by the disruption to business in the aftermath of a terrorist attack, few take up insurance cover, further suggesting that take-up of terrorism insurance was approximately 10% reducing among businesses outside London, who may consider it a low risk or not a priority on a tight budget.
The recent passing of the Counter-Terrorism and Border Security Bill 2018 will now enable Pool Re to extend terrorism cover to include non-damage business interruption losses resulting from acts of terrorism.
[1] Pool Re commissioned The Campaign Company (TCC), who spoke to over 50 businesses who were directly or indirectly affected by the Manchester Arena attack.