Government announces latest five-year review of Pool Re
Her Majesty’s Treasury has announced the launch of the latest five-year review of Pool Re, with the objective of ensuring the good functioning of the UK’s terrorism (re)insurance market, the proper protection of public interests and agreeing Pool Re’s proposed strategic direction for the next five years.
The review will be conducted by Her Majesty’s Treasury (HMT), with close engagement with Pool Re and stakeholders across Whitehall and in consultation with the UK (re)insurance sector. In addition, Pool Re today announced that it will form a Review Advisory Group to advise Pool Re throughout the review. It will consist of CEOs drawn from large and small member insurers, captives as well as other stakeholders representing the interests of the customer and the industry as a whole.
The review will report to the Economic Secretary to the Treasury. HMT will publish a consultation document in late 2020 calling for evidence from interested parties followed by a report in spring 2021 setting out the findings of the review.
Since HMT’s last review of Pool Re in 2014, a series of changes have been implemented to ensure the most appropriate coverage is available in a changing threat environment. Those changes include the inclusion of cover for non-damage business interruption resulting from terrorist activity, the extension of cover to include physical damage caused by cyber terrorism and pricing improvements to better reflect policyholder risk.
Also, since the last review, and in line with its objective of returning risk to private markets, member retentions have increased and Pool Re has built the world’s largest terrorism retrocession programme including an ILS layer, the first of its kind. Both initiatives further spread risk into the commercial markets and insulate UK tax payers from potential liability as the result of terrorism losses.
In furtherance of that strategy, in 2019 Pool Re Solutions was launched to provide analysis and advice to members and their policyholders on terrorism risk awareness, risk modelling and risk management, to promote the mitigation of impact from potential loss.
In February 2020 the Office for National Statistics (ONS) announced that Pool Re would be classified to the central government subsector. The review will also ensure that requirements for central government bodies are met without compromising Pool Re’s ability to operate.
Julian Enoizi, chief executive officer of Pool Re, said: “Behind Pool Re’s success as a public private partnership is our close cooperation with both Her Majesty’s Treasury and our members. This cooperation ensures that we continue to provide the most relevant, affordable coverage against terrorism loss while facilitating the long-term return of terrorism risk to private markets. We welcome this latest review as an opportunity to further develop our strategy to stay ahead of the evolving risk environment and to add increasing value to our members and their policyholders.”
Authored by Pool Re
Pool Re’s purpose is to enable the UK insurance market to offer terrorism cover to any commercial property that requires it. Central to this is the integration of Pool Re’s cover with the underlying property policy which ensures that there is no gap in the cover provided.
Pool Re was designed to insulate the taxpayer from potential financial losses arising from acts of terrorism. It has achieved this effectively, to date paying £635m in respect of 13 claims arising from certified terrorism events in the UK since our establishment. It has never called on the Government’s guarantee.
By providing foundational stability at a reinsurance level, Pool Re has created an environment for the commercial market to re-establish itself, following the market failure in 1992. This stability creates and sustains access, liquidity and confidence to generate the conditions for the private market to gradually write a growing portion of terrorism risk.
Helping UK businesses build resilience against terrorism risk is a priority for Pool Re who have developed SOLUTIONS an in-house centre of excellence created to support Members and policyholders better understand risk awareness, modelling, and management. They have also invested in a range of initiatives with Government security and intelligence agencies to provide tools such as an information sharing platform.
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