Pool Re, Britain’s largest terrorism reinsurer, has launched a new incentive scheme for its Members, effective 1 April, offering discounts on reinsurance costs when they reintegrate terrorism cover as standard across SME property policies.
“Members can choose to reinstate cover across some or all of their commercial property portfolio, in return for reduced pricing on the element their reinsurance portfolio held with Pool Re,” the firm explained.
Pool Re said that it designed this scheme in consultation with its Members and HM Treasury, following modernisation of its Treaty framework last year, which moved from pricing on a risk-by-risk basis to reinsuring Members’ whole portfolios for a single annual price.
“Comprising 99% of the UK’s business community, SMEs represent a unique vulnerability in the UK’s economic resilience, with only 4% covered by dedicated terrorism insurance products (according to a survey from the Federation of Small Businesses),” Pool Re added.
Providing further background, the firm noted that terrorism exclusions became standard in UK commercial property insurance policies following the 1992 IRA attack on the Baltic Exchange.
As a result, SMEs have typically been left without terrorism cover unless they actively choose to buy it back. Pool Re is thus urging its Members to take advantage of this opportunity to make SME terrorism cover the norm, particularly as many SMEs already believe that terrorism cover is already integrated into their standard property insurance policy.
“Member participation in the scheme is entirely voluntary, but to qualify, terrorism cover must be embedded as standard in the product and non-removable from policies, helping to ensure that take-up delivers meaningful protection for smaller businesses,” Pool Re observed.
Tom Clementi, Pool Re’s CEO, commented, “Enhancing terrorism protection for SMEs is not only about closing an insurance coverage gap, it is about strengthening national economic resilience in a world where the terrorism risk landscape continues to evolve.
This scheme gives our Members an additional incentive to offer terrorism cover as standard, as was the case prior to the formation of Pool Re in 1993. With no material financial burden placed on SMEs, we hope the scheme will lead to a significant uptick in coverage across the economy.”
Lucy Rigby KC MP, Economic Secretary to the Treasury, said, “Pool Re plays an important role in supporting the UK’s economic resilience, and this incentive scheme delivers real market change for the UK’s SMEs.
“The Government stands ready to support efforts to strengthen the resilience of UK businesses, and we encourage Pool Re’s Members to make the most of this excellent opportunity to expand their SME coverage offering – it’s good news for Pool Re, its Members and the UK’s business community.”
