Pool Re to offer discounts to insurers who bundle terrorism with SME property cover

Pool Re, the UK government-funded terrorism reinsurer, will offer discounted reinsurance to insurers who offer terrorism cover to small businesses from April.

The terrorism reinsurer is keen to have terrorism cover bundled as part of standard business insurance, as British businesses are woefully under-covered against terrorist attacks.

Currently, just 5% of SMEs have terrorism cover as part of their insurance package, despite accounting for 95% of all businesses in Britain and half of all business revenue.

Pool Re hopes to offer substantial discounts to insurers who include terrorism as a standard, non-negotiable peril, Pool Re chief underwriting officer Jonathan Gray told the audience at an event in London this morning (November 27).

“At the moment, 19 out of 20 small businesses aren’t covered for terrorism, and many of those who aren’t covered think that they are. We want to be in a situation where our members have the flexibility to offer the most appropriate cover for all types of businesses,” Gray told Intelligent Insurer.

Tom Clementi, CEO of Pool Re, said insurers will be incentivised to offer terrorism to specific products, ensuring more businesses are covered against terrorism risks.

Separately, Pool Re is investigating the launch of a fourth Baltic catastrophe bond, having raised £100 million from private investors earlier this year.

Pool Re moved away from reinsuring on a risk-by-risk basis to a new treaty model at the 1/4 renewals, providing the ability to reinsure whole portfolios of risk for a single annual price.

This year, Pool Re upped its terrorism retrocession programme from £2.4 billion to £2.75 billion from over 60 reinsurers, and returned more than £500 million of terrorism risk to the market. It currently presides over more than £13 billion of ready-to-deploy private capital.

Members chose to retain £400 million of risk -- significantly above the minimum buy-in of £275 million.

Other innovations this year include updated reinsurance wording and the launch of a new quote-and-bind underwriting system, Fortress.

Clementi said: “Our job is to provide confidence and resilience to the British economy and bring risk to the market.”

Security minister Dan Jarvis MP told the audience that the UK is committed to spending 5% of GDP on national security by 2035. Britain recently passed a new law that would require some premises and event operators to take into account the impact of a terrorism incident and how they would prepare.

In a sobering presentation on what warfare looks like today and how the West needs to prepare itself against a war-footing Russia and expansive China, Air Marshal Edward Stringer explained that “the nature of war reflects the age that we are in. Cyber risk is becoming the core risk in the economics of lethality”.

Pool Re held the event beside London Bridge, scene of a traumatic terrorism attack in 2019, where a knifeman stabbed two people to death and wounded three others.

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