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Thursday 02 September 2010
Author: Russell Group

The growing fears that domestic and global utilities are being targeted by terrorist groups have led to a surge in the demand for cover.

Fears that access to water and other utilities may be seen as a soft target with the potential for widespread disruption has seen utility companies move to strengthen their resilience to risks.

The fears come as regulations across the world are also tightened and the double threat has prompted a new response by the insurance industry with the launch of a specialist contamination insurance product for water utility firms globally by broker Marsh.

The Lloyd’s market issues a special report in the risks and challenges which will be caused by the threat of global water scarcity last month and warned less then 1% of the world’s water is readily usable by humans and that scarcity will become a major business risk not just for the utility companies.

Marsh said its product is the first of its kind to offer coverage for drinking water contamination, including losses associated with a terrorist attack, extortion costs and goodwill payments to customers.

“Marsh’s water utilities contamination insurance product can provide cover of up to £10 million for accidental contamination, malicious contamination or extortion relating to the water supply,” it said. “This includes payments to domestic and business customers affected by the contamination and those suffering from injury or illness caused by consuming the contaminated water.

Speaking at the launch of the new product, Andrew Ainscough, Senior Vice President in Marsh’s Construction, Power and Utilities Practice, said: “Water contamination incidents can have serious regulatory, financial and reputationalimplications for a water utility. The costs associated with clean-up, providing bottled water, customer communications and subsequent compensation can be substantial.

“Traditional property and liability policies often provide no protection against serious contamination incidents. There is a great deal of interest already in this product from water utilities in the UK, USA, Australia and the Far East.”