Pool Re today announced that it has renewed its retro programme and extended the cover to include material damage and direct business interruption (BI) caused by acts of terrorism using remote digital interference. The renewed cover, brokered by Guy Carpenter, has been increased by £100m to £2.1bn and has been placed with an expanded panel now comprising 47 reinsurers, with Munich Re continuing to be largest market.
The three-layer programme matches the cover provided to Pool Re member insurers, with cyber terrorism now included along with chemical, biological, radioactive and nuclear risks. This represents the most comprehensive and largest terrorism retro placement in the world.
Julian Enoizi, chief executive, Pool Re, said, “This retrocession programme represents a significant milestone for Pool Re and the culmination of months of collaboration, not only with our reinsurance panel and Guy Carpenter, but also with Cambridge Centre for Risk Studies who provided the research into cyber terrorism.
“We have sought to make the cover we provide truly reflective of the risks our member insurers face and also to future proof the scheme to ensure it represents the most comprehensive terrorism reinsurance cover possible. The appetite to engage with the programme has been exceptional and reflects the reinsurance market’s comfort with the risk and the modelling information provided by Pool Re. It also highlights their support for the pool model, which provides them with sufficient information to determine the level of capacity they are comfortable providing. We will continue to seek to extend our programme, in line with our cost and security parameters.”
James Nash, president, international, at Guy Carpenter, said “Guy Carpenter is delighted to have worked with Pool Re to not only grow the retrocession limit to £2.1bn but also extend the cover to include damage by remote electronic means. This closes a gap in coverage at a time when cyber-attacks have never been higher on the industry’s agenda of concerns.”
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About Pool Re
Pool Re was formed in 1993 by the insurance industry in cooperation with the UK Government in the wake of the IRA bombing campaign on the UK mainland. Structured as a commercial reinsurer, Pool Re is a mutual whose Members comprise the vast majority of insurers and Lloyd’s Syndicates which offer commercial property insurance in Great Britain. Ceding terrorism risk to Pool Re affords member insurers a guarantee ensuring that they can provide cover for losses resulting from acts of terrorism, regardless of the scale of the claims.
Pool Re is recognised as a leading example of public/private partnership. It is owned by its Members but is underpinned by an HM Treasury commitment to support the company if ever it has insufficient funds to pay a legitimate claim. In return for that commitment, Pool Re pays a fee to Government and in addition, were it ever to use this support, it would repay the money over time from future premium receipts.
However, in the event of a loss resulting from an act of terrorism, each Member must first pay losses up to a threshold which is determined individually for that insurer. When losses exceed that threshold, the insurer can claim upon Pool Re’s reserves, which now stand at approximately £6.5 billion. These reserves have been accumulated by Pool Re since its inception. It is only in the event that these reserves and the company’s commercial reinsurance are exhausted that Pool Re would require Government support.
Pool Re has evolved during the course of its history and today it partners with academia and provides threat analysis through its research department to allow member insurers to understand terrorism risk with a view to assuming more of it themselves. In addition, it provides incentives in the form of premium reductions for end customers who implement protective security accredited by the government.
Over its 25 year history, Pool Re has dealt with 16 separate certified terrorism claims totalling £635m. Since March 2015, Pool Re’s resilience has been augmented by a commercial reinsurance placement. This re-engages the global market in aggregated UK terrorism for the first time since 1993, and additionally provides protection to both Pool Re’s assets, and the UK taxpayer.
Pool Re is a founding member of the International Forum of Terrorism Risk (Re)Insurance Pools (IFTRIP). Established in 2016, IFTRIP is aimed at fostering closer ties and allowing for greater collaboration between the world’s terrorism disaster risk financing mechanisms. IFTRIP is comprised of national terrorism risk entities from thirteen countries.