CentralWorld fire (Bangkok, May 2010)

On May 19, 2010, the Thai army broke up the Red Shirt (UDD) camp that had occupied the Ratchaprasong intersection for weeks. Within hours, dozens of buildings were set on fire in Bangkok, including CentralWorld, one of the largest shopping centers in Southeast Asia, run by Central Pattana; part of the wing housing the Zen department store collapsed. The insurance file became a textbook classification case. The government of Abhisit Vejjajiva spoke of terrorism and charged UDD leaders on that count, while Thai property policies generally covered riot and civil commotion and excluded terrorism along with insurrection. Follow the official classification and the insurer was off risk. Stick to the established facts, fires set during and after the dispersal, with no identified perpetrator and no claim of responsibility, and the loss stayed within covered riot. The file went to court. Deves Insurance had refused to pay, citing the terrorism exclusion in the industrial all risks policy; Central Pattana sued in 2011, and in early 2013 the Bangkok Civil Court ordered the insurer, at first instance, to pay about 3.7 billion baht for damage and business interruption, holding that the May 19 fires were not acts of terrorism. The Zen department store won a ruling along the same lines, under the covered riot peril. As early as June 2010, the Thai press reported growing interest among large Bangkok property owners in terrorism and political violence cover, which local insurers generally left out of the property policy and sold as an add-on. For the underwriter, a terrorism definition that defers to the classification chosen by the authorities leaves the insured carrying the risk of a political decision.