New legislation proposals will not compensate big businesses damaged from the London riots (Reuters)

Large companies whose property was damaged during the London riots in 2011 will be excluded from compensation if a plan to overhaul Britain's riot laws goes ahead.

An independent review of the Riot (Damages) Act 1886, commissioned by the Home Office, revealed that the cost to British taxpayers of claims arising from the riots, stood at £35.2m (€42.1m, $56.2m) - but could rise to more than £100m.

The review suggested an overhaul of the Act, the main reform being that big businesses should not be compensated from the government pot.

Insurers were effectively "paid twice", the report said, because they received a premium from the insuree along with any compenation recovered from the government.

But the report concluded the government compensation scheme should remain in place for small businesses which turn over less than £2m a year to prevent insurance in areas prone to civil unrest becoming unaffordable.

ABI Responds

The report received a lukewarm reception from the Association of British Insurers and its director general Otto Thoresen.

"We are concerned that the review recommends that insurer recoveries from the state should be restricted to businesses that turn over less than £2m a year. This could be a disincentive for some larger firms to locate in some areas.

"And, disappointingly, it is not recommended that consequential losses should be covered by new legislation, meaning further losses for uninsured firms. The government should carry out an impact assessment on the impact of both these proposals."

However, he said also said that he welcomed the proposal to set up a riot claims bureau staffed by insurance experts to evaluate claims more effectively.

The 2011 rioting was initially sparked in Tottenham, north London, after reports that Metropolitan Police and Operation Trident officers had shot dead an alleged gangster, Mark Duggan.

Over four nights, localised protests over the shooting grew into full-scale rioting across many parts of the capital and spread to major cities throughout England.

Scotland Yard arrested 3,000 people and hundreds were given prison sentences.

According to ABI, insurance companies processed 2,500 claims as a result of one of the largest demonstrations of civil unrest in the UK for three decades.