6 Lloyd's Avenue London EC3N 3AX
+44 (0)20 7680 3088
  • About Airmic

    Airmic is a members’ association supporting those responsible for risk management and insurance within their own companies. We have nearly 1200 individual members who represent over 450 companies.


Pool Re evolves to meet terror tactics


Although terrorism continues to menace businesses and communities across the world, the nature of the threat is changing.

In the UK, the recent government agreement to allow Pool Re to extend its cover received a strong welcome from Airmic. Pool Re Chief Executive Julian Enoizi reviews the latest state of play.

One significant improvement to the scheme will be the extension of Pool Re cover to include non-damage business interruption losses resulting from acts of terrorism. Existing legislation requires damage to property to trigger Pool Re's cover, a requirement borne of an era when the primary method of terrorist attacks was large scale explosive devices, and the main motivation, damage to commercial property. Today, however, terrorists often use simple bladed weapons and vehicles to indiscriminately attack civilians.

This type of attack still poses serious adverse consequences for businesses in the event of an attack, primarily in the form of business interruption. For example, businesses whose premises were not materially damaged by a terror attack, but which were trapped within a police cordon erected in the aftermath or were unable to trade, could not be compensated under existing legislation.

As such, Pool Re has welcomed the Government's commitment to amend as soon as parliamentary time allows the Reinsurance (Acts of Terrorism) Act 1993 and bridge the gap in its cover. The improved proposition will be particularly significant for SMEs, who cannot always fall back on economies of scale in the event of disaster. The new cover will be affordable, flexible, and will further increase the resilience of the UK economy as well as livelihoods and communities up and down the country.  

The forthcoming extension follows quickly after another landmark improvement to coverage: the addition to policies, from April this year, of cover for material damage and direct business interruption caused by acts of terrorism using a cyber trigger. Concerns over cyber terrorist attacks are heightened in the currently tense geopolitical environment, so the timing of the introduction of cyber terror cover - before a major attack - has been welcomed.

This improved cover is now offered as standard to all policyholders who purchase terrorism insurance from Pool Re's member insurance companies and is based on threat assessment research commissioned by Pool Re from the Centre for Risk Studies at the University of Cambridge. Businesses are increasingly concerned about the potentially extensive repercussions of a cyber-attack, but this coverage gap, which left UK businesses exposed, has now been closed.

Not all resilience tools focus on an attack's aftermath. Pool Re's new Vulnerability Self-Assessment Tool (VSAT) for medium and large businesses provides a framework for policyholders to benchmark their approach to terrorism risk management. Insureds that implement proven and effective risk mitigation measures identified by VSAT will receive a 5% premium discount on their Pool Re cover, and the initiative has been accredited by "Secure by Design", the police security approval kitemark.

Between more comprehensive, more affordable cover provided in the wake of a terrorist attack, and incentives to reduce the likelihood and mitigate the effects of an attack in the first place, Pool Re is bringing together public and private spheres to make the UK safer from and more resilient to modern terrorism.