UK terrorism threat likely to be amplified by shortened cycle of conviction, custodial sentence and release of prisoners – businesses should reduce risk and strengthen resilience, says latest Pool Re report
Pool Re, the terrorism reinsurance pool, today publishes its latest Terrorism Frequency Report which analyses the risk landscape of the UK and internationally, focusing on the ‘post-Caliphate’ generation of extremists. It examines the threat posed by those convicted terrorists who’ve already been released, or are soon to be, and looks at the practical steps some businesses are taking to protect their assets, employees and the continuity of their operations.
The report anticipates that the attacks of 2017 have led to a lower tolerance for risk within counter-terrorism investigations, which could result in earlier plot disruptions, leading to weaker evidential yields which would not be enough to convict suspects of the more serious terrorist offences which attract longer jail terms. This, in turn, would lead to quicker release from prison. Thus, the cycle of conviction, sentencing and imprisonment would be shortened, so amplifying the terrorism threat to business and people in the UK.
In addition, the report finds the release of convicted terrorists – recently or in the near future – will keep the current UK terrorism threat level at SEVERE for a prolonged period. Such individuals include al Muhajiroun co-founder Anjem Choudary, Erol Incedal and members of the al Qaeda cell who attempted to bring down transatlantic planes with liquid explosives in 2006.
Julian Enoizi, Chief Executive, Pool Re said, “plot disruptions are at a high level and the preparation of attacks is likely to continue. The private sector should mitigate risk by reducing the likelihood of being caught up in an attack, and be prepared to recover quickly if attacks do occur. At Pool Re, we stand ready to help strengthen economic resilience by covering non-damage business interruption as soon as the legislation, currently going through Parliament, is passed.”
The latest Pool Re Terrorism Frequency Report documents the experience of Canary Wharf’s intelligence and security specialists, who responded to the elevated threat following attacks across the UK in 2017 by assessing terrorist tactics, Islamist extremist propaganda and the possible use of chemical weapons. Security measures, planning, training and public education were enhanced considerably following these assessments – for example training private security teams how to recognise the smell of chemicals which may be used in a terrorist attack.
The latest Terrorism Frequency Report is available here – https://www.poolre.co.uk/terrorism-frequency-report-3-2018/
ENDS
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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 member insurers comprise the vast majority of insurers and Lloyd’s Syndicates which offer commercial property insurance in Great Britain. Ceding their terrorism risk to Pool Re affords member customers 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 cedant 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 £6.3 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 into a comprehensive ecosystem for reinsuring terrorism risk. Since April 2018, Pool Re has extended its cover to include material damage and direct business interruption caused by acts of terrorism using a cyber trigger. In addition, on 22 March, 2018, the Government announced its commitment to amend the 1993 Reinsurance (Acts of Terrorism) Act to enable Pool Re to extend its cover to include non-damage business interruption losses resulting from acts of terrorism, thereby closing a protection gap that had emerged. The amendment to the originating legislation, contained within the Counter Terrorism and Border Security Bill, will if passed ensure a comprehensive response from Pool Re to acts of terrorism in the UK. In both cases, Pool Re is the first of the global terrorism pools to overtly extend its cover to include these threats, demonstrating the strength of public/private partnership in disaster risk financing.
No longer a simple mechanism for providing compensation, today Pool Re partners with various academic institutions in order to better understand the threat of terrorism. In conjunction with its sponsoring of a Professor of Terrorism Risk Mitigation at Cranfield University, Pool Re’s research and analytics department provides threat analysis and modelling to insurers so as to stimulate the commercial insurance market by enabling it to understand, asses and ultimately price terrorism risk with a view to assuming more of that risk over time.
Pool Re also works to increase economic resilience by, for example, providing incentives in the form of premium reductions for end customers who implement protective security measures accredited by the government.
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.
Over its 25 year history, Pool Re has dealt with 16 separate certified terrorism claims totalling £635m. Since March 2015, Pool Re’s financial 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 continues to explore the goal of market normalisation by, for example, examining the possibility of a ground-breaking ILS placement.