Pool Re has commended the UK Government on its commitment to amend the 1993 Reinsurance (Acts of Terrorism) Act to allow the company to cover non-damage business interruption losses that result from acts of terrorism.
Currently, in the event of a terrorist attack, Pool Re is only able to reimburse businesses that have suffered physical damage to their property.
This excludes cover for businesses which may have suffered financial losses due to restrictions on access to property or ability to trade, for example due to police cordons.
This oversight in coverage was identified by Pool Re following the series of attacks across Europe in 2015-16, and in the aftermath of the more recent UK attacks in Westminster, Manchester, and London Bridge.
Accordingly, Pool Re proposed that current legislation be altered to allow its cover to evolve alongside the changing nature of the threat.
This responsiveness will also be reflected in its updated cyber trigger policy, which from April 2018 will be extended to include cover for material damage and direct business interruption.
Julian Enoizi, Chief Executive Officer (CEO) of Pool Re, said: “We welcome and applaud the Government’s commitment to amend the 1993 legislation to allow Pool Re to be the first of the global terrorism pools to overtly extend its cover to include terrorism related non-damage business interruption.
“After months of extensive collaboration between ourselves and the Government, today’s announcement represents another landmark moment for the insurance industry’s ability to provide a comprehensive response to acts of terrorism in the UK and demonstrates the strength of public/private partnership in disaster risk financing.
“This amendment will close the terrorism insurance gap for businesses up and down the country, which, combined with our efforts to make cover more affordable for SMEs and regional businesses across Great Britain, will increase the resilience of the economy.
“Businesses can be confident they will be covered in the event of a terrorist attack, and able to get back on their feet quickly for the benefit of their community, customers and suppliers.
“Pool Re will continue working in partnership with the government to increase resilience in the economy by influencing mitigating behaviour and incentivising implementation of government accredited protective security measures. With the recent launch of our on-line vulnerability self-assessment tool, we commit to making those resources available to smaller businesses.”
Pool Re’s proposal was also supported by the British Insurance Brokers’ Association (BIBA), which called for an amendment to current terrorism re/insurance legislation in its 2018 manifesto.
Graeme Trudgill, Executive Director of BIBA, commented: “Both BIBA members and MPs had raised with us the changing nature of terrorism which is leaving businesses exposed. We raised our concerns with Pool Re on the need to extend their scheme.
“We also recognise the need to encourage more small businesses to buy any kind of terrorism cover as fewer than 3% of SMEs take up any cover at all.”
