Pool Re returns contingency cover against terrorist acts to commercial reinsurance market

As a direct result of sufficient capacity now existing within the commercial insurance and reinsurance markets to cover contingency losses arising from acts of terrorism, Pool Re has announced that it will cease to reinsure members for the contingency cover they provide to their insureds.

The state-backed terrorism re-insurer began writing the class soon after London was awarded the 2012 Olympic Games when the commercial market determined that it could not provide cover due to lack of sufficient capacity.

More recently, however, the contingency market has requested that it be allowed once more to retain such risks for its own account and not reinsure them to Pool Re.

Julian Enoizi, CEO at Pool Re, explained: “The purpose of Pool Re is to provide reinsurance cover against terrorism losses where the commercial market is unable to do so in sufficient quantity to meet demand. As the commercial markets develop greater appetite and capacity, and there’s therefore no longer a market failure, it’s appropriate for us to withdraw. We’re pleased that contingency cover is now available to insureds commercially. Consistent with its strategy, Pool Re will continue to work with the commercial market to ensure that, wherever possible, cover can be returned to the market.”

After Q1 2019, it will not be possible for member insurers to cede this class of business to Pool Re. Most of the risks formerly ceded to Pool Re consisted of sporting events, concerts and tours.

Co-operation with Government

Julian Enoizi

Julian Enoizi

The Pool Reinsurance Company Limited was set up in 1993 by the insurance industry in co-operation with the Government in the wake of the 1992 bombing of London’s Baltic Exchange by the IRA.

Pool Re is a mutual reinsurer whose members comprise the majority of insurers and Lloyd’s Syndicates which offer commercial property insurance in the UK, with membership of the scheme affording them a guarantee which ensures that they can provide cover for losses resulting from acts of terrorism regardless of the scale of the claims.

The scheme, which was the first public-private partnership to cover insured losses caused by acts of terrorism, is owned by its members but underpinned by Her Majesty’s Treasury’s commitment to support Pool Re if ever it has insufficient funds to pay a legitimate claim. Pool Re pays a premium to the Government for this guarantee and would repay the money over time if it ever used this facility.

In the event of a loss resulting from an act of terrorism, each member must first pay losses up to a threshold that’s determined individually for each insurer. If losses exceed that threshold, the insurer can then claim upon Pool Re’s reserves. These reserves have been accumulated by the members of Pool Re since its inception. It’s only in the event these reserves are exhausted that Pool Re would then draw upon Government support.

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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