Pool Re members to take greater retention in terrorism losses

Pool Re, the mutual reinsurer that provides terrorism cover for commercial property in the UK, has announced changes to its reinsurance arrangements.

The changes mean its members now taking a greater retention in the event of a terrorism loss.

Since 2006, the industry retention for any one event has remained at £100 million. From 1 January 2016, the retention will increase to £135 million any one event but capped at an annual aggregate of £270m any year.

The initiative is in keeping with one of Pool Re’s key objectives, namely to facilitate the return of a normalised UK terrorism insurance market over time. The move will also increase the resilience of the Pool Re scheme and further move the UK Government and the taxpayer further from potential liability.

“Our continued goal is to re-engage global capacity in the provision of terrorism cover in Great Britain,” said Steve Coates, chief underwriting officer, Pool Re.

“This process started with the purchase of retrocession cover from global re-insurers in March this year, which saw significant aggregated cover provided in Great Britain for the first time since 1992.

“Given the industry retention had been unaltered since 2006, there seemed to be scope to return more of the risk to the local market. We will continue to examine ways to secure more capacity from insurers andre-insurers, so as to increase scheme resilience and ensure that Pool Re only provides capacity that the market is unable to.”