Martyn's Law: How the UK’s Protect Duty will shake up terrorism cover

The UK’s incoming Terrorism Bill – otherwise known as Martyn’s Law – moved a further step along the legislative process last month. Fiona Hahlo, partner and Courtney Brotherson, trainee at international law firm RPC, take us through what the Bill means and explore why the London market need to sit up and take note….

What is the Protect Duty and who does it apply to?

The Terrorism (Protection of Premises) Bill – also known as the Protect Duty or 'Martyn's Law' (named after a victim of the tragic 2017 Manchester Arena bombing) – seeks to impose a new duty on owners and operators of publicly accessible premises to address the evolving issue of terrorist threats.

The new legislation will be applicable to various locations where a 'qualifying activity' takes place. 'Qualifying activities' include those which take place at entertainment venues, visitor attractions, retail outlets, places of worship and health and education institutions. A two-tier system will determine the proportionate security steps expected to be taken to implement the Duty.

The 'standard' tier will apply to locations with a capacity between 100 and 799. Duty holders will be expected to carry out low-cost training on terrorism awareness and to complete a standard terrorism evaluation, considering how best to respond to a threat.

The 'enhanced' tier will apply to locations with a capacity of 800 or more. They will need to appoint a designated senior officer for the premises, will be expected to regularly complete a terrorism risk assessment and consider implementing ‘reasonably practicable’ measures to reduce the risk of terrorist events. Duty holders may also need to hire specially trained staff and implement monitoring systems or CCTV to demonstrate they are taking proportionate steps to comply with the Duty. In both tiers, duty holders must identify a suitable evacuation procedure for staff and the public.

While there is already guidance available to help organisations combat terrorism, it is envisaged that more will become available ahead of the Duty coming into force.

How will the Duty be enforced?

A regulator will have the power to impose sanctions for non-compliance with the Duty. While at a recent Home Affairs Committee meeting there were discussions about the Health and Safety Executive (HSE) taking on this role, it remains unclear who that regulator will be.

For venues falling under the standard tier, non-compliance could lead to a maximum fine of £10,000, while those under the enhanced tier could face a maximum penalty of £18 million or 5% of worldwide turnover. These fines are punitive and will not be covered by insurance policies.

What will this mean for smaller businesses and community venues?

The draft legislation has raised concerns about the impact to small businesses and community venues, many of which will likely fall under the standard tier. Some fear that the measures will place a disproportionate burden on local, volunteer-run venues and place them at risk of closure.

During a recent Home Affairs Select Committee meeting, concerns were raised about how these organisations would cope with the new and potentially costly measures. Neil Sharpley, policy chair at the Federation of Small Businesses, commented that "some of the volunteers who are already put off by some of the measures they have to consider, will be deterred if an additional burden is placed on them in relation to terrorism".

What are the potential implications for insurers of these venues?

Standard commercial and property policies typically exclude coverage for terrorism, leaving some facilities/venues without specific protection for a terrorist event. In the unlikely event that some venues have separate terrorism policies or terrorism liability cover written into existing policies, the limits and scope of such coverage may be inadequate for the potential damage that can arise from such an event.

Insurers may see an increased demand for terrorism-specific policies, extensions on existing policies, or higher limits of indemnity. This in turn may result in increased premiums on policies leading to additional costs for small businesses and community venues. Insurers will need to stay alert to navigate upcoming developments and assess how the industry might react.

In February 2023, the Home Office confirmed it was engaging in roundtable discussions with the insurance industry to address the implications of the Duty on insurance policies.

The recently published review of the draft Bill by the Home Affairs Committee has raised concerns about its adequacy and impact on smaller businesses/venues. Scrutiny of the Duty continues, and this will hopefully ensure that the correct balance is struck between protecting the public against terrorism and protecting smaller businesses and community organisations.