The UK government’s reinsurance company Pool Re has reduced its reinsurance pricing, saying that the adjustments will come into effect from October.
According to Pool Re, the extent of the reduction will vary according to geographical location. Overall, reinsurance pricing will reduce by approximately 20% outside Zone A (central London) and could reduce by more than 30% in many non-urban areas. These decreases are likely to prompt a commensurate reduction in insurance prices, although Pool Re member insurers will remain responsible for setting pricing for their own policyholders.
Tom Clementi, CEO of Pool Re, said: “This agreement to reduce prices was one of the standout successes of the recent government review of Pool Re. We hope that it will result in lower insurance prices for policyholders, which in turn will encourage more businesses to adopt vital terrorism cover.”
He added: “Together with the unlimited guarantee from HMT which enables Pool Re to provide comprehensive terrorism cover, including for CBRN, we believe this significant price reduction will help provide increased resilience for businesses across the country to terrorist events.”
Alongside its enhanced modelling capability, Pool Re’s VSAT (Vulnerability Self-Assessment Tool) has been re-designed to improve navigability and user experience. Through effective use of the tool, policyholders who attain the benchmark standards and have portfolio sums insured in excess of £50m can trigger an increased discount of 10%. Discounts for different types of self-insurance, either loss limit or deductible, have also been improved.
This reduction comes just a few months after Clementi was named the new CEO of the reinsurer, taking over from Julian Enoizi.
Pool Re is the insurance industry’s mutual for reinsuring terrorism risk in Great Britain and operates as an Arm’s Length Government Body.
It was established in 1993 by the UK Government in response to the untenable losses and uncertainty caused by the Provisional IRA’s devastating bombings in financial centres in London and Manchester during The Troubles.
Recently, the reinsurer said that it would implement the recommendations from the HM Treasury’s five-year review of its work.
The reinsurer said that it would examine the bifurcation of the risk between conventional and non-conventional terrorism and transitioning to a treaty system of reinsurance to facilitate increased risk retention by cedants. It said it would also allow the continued development of consultancy services to members through the Pool Re Solutions division.
Pool Re has also in recent months completed the placement of its second terrorism ILS catastrophe bond, following the maturing of its original issuance from 2019. Issued through a UK domiciled special-purpose vehicle, Baltic PCC Ltd., the 2022 notes were issued in a 144A format. The bond increased in size to £100m from the £75m issued in 2019, with the risk spread reduced to 5.5%, compared to 5.9% under the 2019 issue.
