Pool Re confirms upcoming changes to its UK terrorism risk reinsurance programme

The scheme said that it would introduce revised rates, based on “modern modelling techniques”, but with a range of discounts for smaller insurance buyers and those with some of the largest insured amounts. It would also allow members to cover larger ‘deductibles’ on their own, without resorting to the mutual fund.

Announcing the changes last week, Pool Re chief executive Julian Enoizi said that the scheme had to “evolve in tandem with the shifting threat facing businesses across the United Kingdom”.

“This is a continuous process which can only be achieved through extensive collaborative discussion with our members and stakeholders,” he said. “Today’s announcement represents the culmination of the first stage of a process which will see Pool Re continue to look to enhance its offering.”

Pool Re was established by the UK insurance industry, in cooperation with the UK government, in 1993 in response to an IRA bombing campaign on the UK mainland. It is a mutual reinsurer with members making up the vast majority of the insurers and Lloyd’s syndicates that offer commercial property insurance in the UK. Membership of Pool Re provides insurers with a guarantee that they can provide cover for losses resulting from acts of terrorism, regardless of the scale of the claims.

Last year, the UK insurance industry agreed to increase the share of premiums paid to the UK Treasury under the scheme from 10% to 50%, in return for the continuing agreement of the government to pay out on any legitimate losses should Pool Re have insufficient funds to cover them. At the time, the scheme indicated that structural changes enabling it to better account for “evolving” threats were underway. Pool Re last updated its rating mechanism in July 2002 in response to the changing reinsurance market after the US terrorist attacks of 11 September. 2001

From October, Pool Re will introduce a “bespoke SME proposition” offering a 40% discount to those with an insured material damage sum less than £2 m. It will also consider discounts on locations where insured values are at least 20% more than the limit, where loss limits are greater than £500m, and allow discounts for insured parties that agree to cover a ‘deductible’ between £500,000 and £1m before making a claim on the fund.

Separately, Pool Re announced that it had partnered with the National Counter Terrorism Security Office (NaCTSO) to offer a potential 2.5% premium reduction to insured entities that signed up to NaCTSO’s new ‘Crowded Places’ risk management programme. The joint initiative will open for applications in October, Pool Re said.