Counter-Terrorism and Security Bill

Lord Hanson of Flint Excerpts

Tuesday 16th December 2014 Commons Chamber

[James Brokenshire]

Clauses 34 and 35 address two discrete but important aspects. Clause 34 amends the Terrorism Act 2000, so that an offence is committed if an insurer or reinsurer reimburses a payment that they know, or have reasonable cause to suspect, has been made in response to a terrorist demand. Like other terrorist-financing offences, the measure will have extraterritorial effect. As a result of the measure, we will ensure and put beyond any doubt that UK insurance companies do not form part of a terrorism ransom chain, and that those who make payments to terrorist entities cannot be reimbursed for the payment.

Clause 35 introduces schedule 5, which contains amendments to the power to examine goods at ports contained in schedule 7 to the Terrorism Act 2000, as well as amendments to other enactments relating to that power. Those changes follow on from a number of recommendations that David Anderson, the independent reviewer of terrorism legislation, highlighted in terms of the need for certain clarifications in respect of the specific schedule 7 power. The purpose of these changes is to clarify the legal position in relation to where goods may be examined and the examination of goods that comprise items of post, and to put beyond doubt the basis in law for this vital investigative capability.

[Mr David Hanson (Delyn) (Lab)]

I thank the Minister for his helpful explanation. It is right that we do not pay ransoms and that insurance companies are not allowed to do so. The Bill proposes to make it illegal to make payments on ransom insurance policies, and that is an argument I support and do not wish to argue against this evening. However, I do want to ask him a couple of questions.

Will the Minister tell the Committee how he has consulted insurance companies on the impact and implementation of these measures? The Government’s own impact assessment makes it clear that there is a risk that:

“UK insurers/reinsurers may lose business. Overseas insurers may be able to offer the same product as UK insurers but without this restriction. Based on consultation, we estimate…UK insurers/reinsurers’ annual gross premium income from kidnap and ransom insurance policies to be between £60 and £160 million.”

a year. There are two issues I want to raise. What response has he had from insurers on their potential loss of £160 million? I am particularly concerned about whether the measure will simply transfer that insurance risk to companies that operate abroad.

I want clarity on clause 34, which makes it a criminal offence for people in the UK to take out ransom insurance. If a UK citizen insured themselves through a foreign company, would the provisions still apply? The Minister has mentioned extraterritorial reach, but I want to be clear that the Bill does not deny UK insurance companies the premiums of £60 million to £160 million by simply transferring the fund to foreign companies. Will the provision apply to a company based in the UK but whose policy could be placed with an insurance underwriter based in America, France or Rome? I would be interested to know whether all those aspects are covered. I am sure the Minister will be able to allay my concerns and fears.

As an Opposition spokesman I continue to support the straightforward principle—I supported it when I was a Minister—that we do not pay ransom demands, because they simply encourage further kidnappings and associated activity. Does the Bill cover other areas, such as a kidnapped oil worker? We may not pay a ransom, but there might be insurance issues related to covering his loss of salary or his mortgage payments. I want to be clear that the measures cover the issue of ransom, as opposed to other insurance matters that a responsible company would want to implement.

Finally, the Bill has a clear definition of terrorism, but I would welcome the Minister’s view of, for example, Somali pirates. They are not terrorists, but does the definition cover the payment of ransoms in general, or is its focus on terrorism alone? If the Minister wishes to table further amendments, I would be happy to support measures that address other types of ransom, because it is a cardinal principle that we do not pay ransoms in any way, shape or form for individuals who have been kidnapped. I do not quite understand the Minister’s approach to insurance payments, helpful though it is, and I would welcome an explanation of his position on other types of kidnap ransoms.

We support clause 35, which is a sensible measure. I do not need to say anything else. I hope the Minister will respond to my comments.

[James Brokenshire]

I thank the right hon. Gentleman for his support. It is a sobering fact that ISIL alone made $35 billion to $45 billion between September 2013 and September 2014. There is no doubt that that has boosted its capability. Simply put, money paid to terrorists equals an increased threat to the safety of UK citizens. The right hon. Gentleman understands that, as he made clear in his speech.

We consulted leading representatives of the insurance industry and its regulators, the police and operational and international partners about the measure. We have had constructive discussions with the industry. This is a niche part of the wider insurance market and it makes up only a small part of the business of those insurers. Insurance companies have been clear that their policies exclude reimbursement of ransoms paid to proscribed groups in any case. The point of the measure is to make that absolutely clear and put it beyond doubt. Section 17 of the Terrorism Act 2000 centres on what constitutes arrangements and we are seeking to provide complete clarity. The measures are framed in the context of terrorism, although there are various insurance policies that operate in the market, because they are intended to prevent money going to terrorist groups.

The right hon. Gentleman asked about extraterritorial jurisdiction. The measures are intended to govern insurance companies based in the UK, so that they cannot offshore those payments; if they have some other insurance company with links to the UK, that company will be caught by the measures. It is therefore important that the legislation is framed in that manner.