TERRORISM : Londoners May Face Insurers’ ‘IRA Levy’

The Irish Republican Army’s bomb campaign in England, and particularly its capital, may be paying dividends after all.

The campaign’s goal is to damage the nation’s economy, and although Britons tend to brush off the frequent IRA bombings and conduct business as usual, some Londoners are facing steep insurance increases in residential and commercial buildings because of the terrorism.

Last year, after a bomb near the offices of the Commercial Union insurance company caused damage in London’s financial district, insurers warned business property owners in the capital that their premiums could rise.

Insurers are angry that the government refuses to pay compensation for bomb damage outside of Northern Ireland. Terrorist damage in the province, where the IRA is waging a relentless campaign to drive the British out, is reported to have run to about $50 million last year. The government does pay compensation for that damage or loss of business but not for the losses from terrorism on the mainland. Without such compensation here, insurance companies say they are planning to raise premiums to take into account the threat of terrorism.

Business sources estimate that terrorist attacks against buildings and stores cost insurers more than $1 billion in 1992. But recently, insurers have decided that although the bombings have been confined to business properties, large apartment buildings are just as vulnerable.

Insurance sources say that the average apartment dweller in and around central London may ultimately pay about $150 extra on a $150,000 apartment. That would amount to an “IRA levy” that would nearly double current insurance rates.

One executive of a residential property management group in the Maida Vale district declared: “Some people are going to be facing a doubling of their premiums. It is absolutely ridiculous that leaseholders are being made to pay out like this.”

The government Trade and Industry Department is engaged in talks with the insurance industry about the additional levy. But the government’s position, as a Trade and Industry spokesman put it, is that “we regard the question of cover against terrorist attack as essentially a commercial matter to be resolved between owners and tenants and their insurers.”

If the rate increases go through, those in the real estate business say, the question is sure to be raised whether those living in London’s inner residential areas--including such well-known addresses as Belgravia, Knightsbridge and Chelsea--are unfairly bearing the financial brunt of IRA bombings.

In most insurance policies, damage from terrorism is covered by a clause protecting property holders against exceptional events such as explosions and earthquakes. But some Londoners report that insurers have already stripped their policies of such terrorism protection and given them a 30-day deadline to pay higher premiums.

In a show of defiance this week, the Institute of (Business) Directors declared to the IRA, “We will not be defeated by terrorism.”

But others noted that while the IRA’s bombing campaign has not weakened British morale, insurance rates could damage the corporate and personal economies of Londoners.