UK's Pool Re to undergo major review amid heightened risk environment
UK government-backed terrorism mutual reinsurer Pool Re is set to undergo a formal review with the objective to develop its strategy for the next five years considering the rapidly changing threat environment.
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.
Additionally, Pool Re will form a Review Advisory Group to advise it 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.
Earlier 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.”
Since HMT’s last review of Pool Re in 2014, several changes have been implemented considering a changing threat environment, such as 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.
Additionally, 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 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.
