Proposed U.K. Treasury change likely to increase Pool Re rates
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The CEO of Pool Reinsurance Co. Ltd., the U.K. terrorism reinsurance backstop, said Monday he likely will convene an extraordinary general meeting of insurers to discuss proposed changes by the U.K. Treasury department to terms governing participation in the pool.
HM Treasury late last week wrote to insurance companies in the United Kingdom outlining proposed changes to the terms.
While those proposals are confidential, sources said that it is expected that they will result in an increase to the levy charged to insurers for participation in the backstop plan — currently set at 10% of Pool Re's annual premium volume.
“We have written to all members of Pool Re making them aware of the likelihood that we will convene an (extraordinary general meeting) in the coming weeks to vote upon proposals that HMT have made us aware they intend to make which will substantially increase the premium it receives under our retrocession agreement,” Julian Enoizi, CEO of Pool Re, said in a statement.
Pool Re, which is based in London and has been in operation for 21 years, provides a reinsurance backstop for commercial property and business interruption losses caused by acts of terrorism in the U.K.
Most insurers that offer commercial property and business interruption coverage in the U.K. are members of Pool Re.
Participating insurers offer terrorism coverage where policyholders request them to do so and pay losses up to a retention level determined on the size of the individual insurer's terrorism insurance portfolio.
Insurers may claim on Pool Re's reserves for losses that exceed that retention level.
Losses that exceed Pool Re's reserves — however large — are guaranteed by the government.
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