On Sunday 4th March, the emergency services were called to a bench in the centre of Salisbury where father and daughter Sergei and Yulia Skripal were found “in a catatonic state”. Within the next few hours, both the Skripals and a British police officer DS Nick Bailey were admitted to hospital. The next day the police declared a major incident in Salisbury and began cordoning off restaurants and pubs known to have been visited by the Skripals. A week later, the Prime Minister Theresa May declared that the Skripals had been poisoned with a military-grade nerve agent, Novichok. It was later confirmed that the highest concentration of the agent was found on the front door of Sergei Skripal’s house.
The Salisbury incident is not terrorist in nature and is unlikely to be certified as a terrorist attack by the UK Government. However, it represents the “first offensive use of a nerve agent in Europe since the Second World War” [1] and the first major Chemical, Biological, Radiological, Nuclear (CBRN) poisoning incident in the UK since the murder by radiation poisoning of Alexander Litvinenko in 2006. Pool Re has covered acts of terrorism involving CBRN methods since 2003 and has been working with Cranfield University and Guy Carpenter for the past two years to model the effects, and enhance our understanding, of such attacks in the UK. The lessons learned from the Salisbury incident, in terms of decontamination and business interruption, will be invaluable not only for Pool Re’s modelling, but for the wider public and private sectors’ planning for, and understanding of, this type of event.
The ongoing investigation into the Salisbury incident has highlighted two key areas of consideration: the extent of the contamination and the impact of a small amount of nerve agent; and the likelihood that the financial losses suffered as a result by businesses and the wider Salisbury community will not be covered by their insurance policies.
The investigation into the Salisbury incident currently spreads over 27 miles and two counties to reach the town of Gillingham, Dorset, where a truck was removed by the military. Despite the amount of nerve agent used being relatively small (assumed to be less than a teaspoon), the map in figure 1 shows the various locations involved in the police investigation into the Salisbury incident, and the extensive clean-up operations required for a CBRN incident. Within the emergency services, two ambulances were towed from the Amesbury ambulance station in the days after the event, and a significant number of police and military vehicles may need to be destroyed. The time taken by the authorities (a day) to recognise and declare a major incident may have exacerbated the situation and allowed individuals potentially exposed to the nerve agent to extend the area of contamination. It is reported to have taken at least four hours between the victims’ condition being reported and the authorities recognising the potential for hazardous contamination, in addition to the unknown amount of time passed between the actual administration of the poison and the emergency call being made. Police and health officials identified a further 131 people who could have been exposed to the nerve agent, and the public were not informed by Public Health England for a further six days.
Whilst the UK Government and international community engage in geopolitical disputes and diplomat expulsions, the key concerns for businesses in Salisbury will be more local, and many are facing losses they are unlikely to be able to recover from their insurance policies. At the time of writing one month after the event, the Zizzi Restaurant and The Mill Pub which the Skripals attended on 4 March, as well as the area immediately around the bench, are still closed off and it may be a number of months before access is handed back to the occupiers. A further six businesses remain closed within the police cordon and will be experiencing 100% losses, although the majority of these businesses are large retailers. Smaller businesses and market traders within the cordon are also reporting significant losses; one flower seller close to the park bench where the Skirpals were found reported losses of £9,000 in the week of Mother’s Day[2], and a butcher’s stall reported losses of 60-70% at a minimum[3].
It will be some time before quantitative data can be examined to determine the impact of loss of attraction to the city, however anecdotally there are suggestions that there has been a 40-50% downturn in footfall to Salisbury’s two principle sectors, retail and tourism, due to a fear of contamination and the perception that businesses are difficult to access or closed. Footfall to Salisbury Cathedral, for example, reduced by 40% in the week immediately after the incident. One month after the attack, the Cathedral is experiencing a visitor reduction rate of 20% and a 24% reduction in income[4]. Recovery measures, such as offering free parking in all Salisbury car parks by Wiltshire Council[5] and the #SalisburyIsOpen work by the Business Improvement District (BID), may alleviate some of the difficulty in attracting residents and visitors.
When the restaurant, pub and cordoned areas finally reopen, it remains unclear how long it will take for the perception of public health concerns to ease and before the public feel comfortable visiting the same areas again, despite official confirmation of decontamination efforts. The difficulty of detecting, and the highly persistent nature of Novichoks may lead to questions on full decontamination and “how clean is clean enough?”. The hotel and restaurant where Litvinenko was reported to have been poisoned reopened after just a few months but the postal facility in Hamilton, New Jersey involved in the “Amerithrax” incident in 2001 was closed for more than three years.
The unprecedented nature of the interruption to business in Salisbury raises some interesting issues for business interruption (BI) insurance policies. BI policies have historically been triggered by damage events such as a fire or storm, although since the turn of the century most now offer some coverage for business interruption caused other than by damage to property, such as the closure of an area due to a crime scene or infectious disease.
However, there are certain eventualities that are invariably excluded by all commercial insurance policies, two examples of which are war and the use of CBRN. One of the reasons behind the application of these exclusions is the notion that the financial consequences of such things as a war between two countries or indeed the use of radiological or nuclear weapons, was not capable of coverage by traditional insurance policies. This is because the sheer magnitude of potential losses could exceed the ability of insurance and reinsurance companies to pay, and would be more appropriately funded by other means such as government.
CBRN coverage is available within terrorism policies backed by Pool Re, and on a more limited basis in some other terrorism covers. Traditional commercial property and business interruption policies do not offer such cover, although pooling mechanisms have been established to share risks for nuclear installations around the world.
Since it seems possible that techniques, thought formerly to be restricted to nation states and deployed during a conflict, may be used by others in a more restricted and localised manner, it may be useful for insurers and reinsurers to consider if their historical perspectives on certain scenarios should be re-examined. Some of these scenarios will always be beyond traditional insurance solutions, nuclear incidents being an example, but equally, consideration should be given to whether certain perils might be insurable on a restricted basis provided the underwriter can understand the peril sufficiently, so as to price and underwrite it. The deployment of a crude chlorine type device, such as we have seen in Syria, by a criminal gang could cause damage to a wider community than the rival against which it was targeted. This interruption or damage would probably be capable of comprehension and the magnitude would not be as catastrophic as a large flood.
In summary, not all CBRN losses are the same, and perhaps the Salisbury incident will provoke a wider debate around whether some elements are capable of coverage within traditional insurance policies. This incident has brought to light the macro consequences of a micro CBRN event and the potential for extensive financial losses. The incident will continue to provide invaluable lessons to those preparing for a mass casualty, large-scale incident. Pool Re will continue to use the findings of this incident to better inform its exposure modelling.
[1] Salisbury attack: Joint statement from the leaders of France, Germany, the United States and the United Kingdom, www.gov.uk, 15 March 2018
[2] Whats open & whats not? Extent of Salisbury spy cordons, Spire FM, 13 March 2018
[3] Salisbury struggling with an unwanted fame in wake of nerve agent attack, Sky News, 01 April 2018
[4] Interview with Salisbury Cathedral, 04/04/2018
[5] Salisbury city parking to be free for shoppers and visitors, Wiltshire Council, 20 March 2018