Pool Re members and HM Treasury give backing to modernised treaty model


Pool Re, Britain’s government-backed terrorism reinsurer, is pleased to announce that its members and HM Treasury have backed formal proposals from the Pool Re Board to transform the current Pool Re scheme. These approvals pave the way for a modernised aggregate catastrophe excess of loss treaty, which will ensure the scheme remains relevant and is fit for purpose in the digital age.

Whilst there will be no changes to the fundamental rules of the scheme and the coverage provided, the proposal will allow members more flexibility to underwrite terrorism commercial property damage and business interruption risks in line with their strategic priorities and risk appetite. This will create the conditions necessary to support members in driving greater take-up of terrorism cover, returning risk to the private market, further distancing the taxpayer from the financial consequences of acts of terrorism, and bolstering the resilience of the UK economy.

Pool Re’s proposals to convert its reinsurance arrangements from the current facultative obligatory treaty to an annual aggregate catastrophe excess of loss treaty will take effect in April 2025. This modernisation is a core element of the ‘Scope of Works’ programme agreed by members and HM Treasury following the last review of Pool Re by the government which concluded in March 2022.

Transformation from a facultative treaty to aggregate treaty basis will involve the following:

  • More risk-reflective pricing: the updated scheme will provide members with reinsurance cover that is priced in a more sophisticated and risk-reflective way.
  • Members’ reporting obligations will simplify, with members only required to provide an annual exposure return, reducing their administrative burden.
  • Choice and flexibility built into the new treaty arrangements will allow members to choose their own preferred retention level, subject to a minimum retention specified by Pool Re, and so take on more terrorism risk.

Pool Re Chief Executive Officer, Tom Clementi, said: “Members and HM Treasury have given Pool Re a very clear and exciting mandate to continue Pool Re’s modernising journey. When Pool Re was founded some 30 years ago, it was never intended to be a permanent, static, and definitive solution. Our job was always to correct a market failure, and to provide opportunities for the industry to take more terrorism risk onto its own balance sheet and normalise the market. The change to an aggregate catastrophe excess of loss treaty is the best possible outcome for both members and the taxpayer.”

Economic Secretary to the Treasury Bim Afolami said: "Pool Re has worked hard on its plan to modernise its reinsurance offering, and I am pleased that Pool Re’s proposals are supported by its members as well as the Government. I look forward to seeing the impact of the change for members, customers and the terrorism insurance market”.

The shape and structure of the updated scheme is the result of more than two years’ engagement and consultation with members and HM Treasury.

Authored by Pool Re


About 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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