The UK’s new Terrorism Act 2025 (opens a new window) has received Royal Assent in April 2025, introducing enhanced accountability for the safety and security of public venues and establishing a new legal bar for negligence in the mitigation of terrorism risks.
Organisations affected will need to (re-)assess the risk of terror attacks, implement measures to reduce the risk, and put together robust terrorism plans. In particular, smaller organisations that may not be regarded as obvious targets may need to take action, as many of them will have never formally assessed terrorism threats. Furthermore, affected businesses will need to review their insurance policies to ensure appropriate cover.
Impact on liability insurance
Whilst the full impact of the legislation is expected to not come into effect for another 24 months until expiry of the implementation period, conversations around the implications of the Act are becoming more commonplace. Insurers are looking for clients who are impacted to present risk management information which shows they are complying with the legislation and enhance the defensibility of claims. Ultimately, insurers will want to see that clients are actively engaging with the responsibility that the Act is establishing.
Clients should also be aware of the possible financial impact of the legislation as some insurers with more limited retail appetite may now look to price for affirmative terrorism extensions under General Liability policies, where this would not have previously been a rating consideration.
Whilst insurers have had different responses, litigation is yet to be tested around insurer’s ability to rely on non-compliance with the Act to deny cover. Insurers’ primary concern will be around client’s ability to defend claims. Further to this, caution may be given to instances where multiple parties are responsible for compliance with the legislation. Examples include a venue owner and event organiser working on any one event (e.g. an event being hosted by the insured at a non-owned arena/venue), or a premises within a premises (e.g. a retailer within a shopping centre). The Act caters for this under the co-operation section and maintains that this legal responsibility cannot be delegated. It will be crucial for liability insurance arrangements to reflect the increased standards that business owners will be expected to meet as part of the redefined scope of duty of care which is extended through this legislation.
To meet the increased demands for risk information that the legislation is likely to bring, it’s key that businesses work closely with their liability placement broker to understand the demands and needs of insurers and how they can effectively prepare for implementation of the Act. This could include but is not limited to, reviewing policy wordings, benchmarking limits of liability, reviewing comprehensive risk information and their current terrorism risk mitigation strategy.
Impact on directors’ and officers’ liability
Although insurers are currently not expected to implement any directors’ and officers’ (D&O) liability insurance coverage changes, the new Act is another risk to add to the ever-expanding D&O landscape. There are potential D&O liability implications in relation to designated senior officers responsible for enhanced duty premises. In case of a claim, enforcement action, or prosecution to this person’s negligence, this might trigger the D&O cover. Ensuring that any bodily injury exclusion in D&O policies is softened can enable cover for defence costs through an investigation or prosecution. Fines, penalties and disqualification are unlikely to be insurable under a D&O policy.
If Martyn’s Law affects a business directly, insurers will expect the management to have taken legal advice on how the legislation impacts the business, and to have acted on the recommendations to ensure compliance with the new regulations. Insurers may ask about the company’s readiness for the new law at renewal, and the management should be prepared to share high level details of the plan for compliance, the name of the consultancy used, if there is specific expertise on the board etc – in line with all other directors’ risks.
Finally, businesses should review their insurance policy for any terrorism-related exclusions and bodily injury exclusion which are absolute in their nature, which may inadvertently override any D&O coverage for Martyn’s Law. Some insurers (although very few) add these as standard which could be problematic in this instance.
Impact on terrorism insurance
An immediate impact of the Act is likely to be an increase in demand for terrorism insurance, as business owners become more aware of the risks associated with the operation of public premises.
General liability insurers may exclude terrorism from their towers following the Act. This can, however, be fulfilled in the standalone terrorism market to cover any gaps that the general liability exclusions may pose. As a result of the increased demands for terrorism liability, terrorism underwriters will need to better understand the liability exposures that businesses face alongside controlling their own accumulation of exposure. This may require further underwriting information regarding the events schedules and capacity.
Positively, the market is aware of the changing requirements. London Market underwriters are already working on innovative products in conjunction with specialist crisis responders designed to ensure clients are prepared for this new Act. Historically, the market has shown flexibility by adapting policies to provide affirmative cover for clients, so they are well positioned for the requirements that Martyn’s Law entails. Beyond the indemnification, Martyn’s Law is likely to increase the demand for specialist crisis consultants and responders to help guide clients through terrorism events and mitigate the impacts that these scenarios may pose on the insured. These specialist security firms have historically been utilised by the standalone terrorism market to work alongside underwriters to provide risk mitigation frameworks for clients, security checks and analysis, and post-event support to clients globally via insurance policies. This may further help the standalone terrorism market to position themselves at the forefront of the sector for assisting clients with the impending changes that Martyn’s Law will pose.
Lockton is working with insurers to cover potential gaps arising from the Act.
For further information, please access our Terrorism Act report below or contact a member of our team.