Pool Reinsurance Co. Ltd. on Tuesday said it had secured several concessions and acceptance of several modernization proposals from the U.K. Treasury ahead of a Friday vote on Treasury proposals to increase the retrocession premium it charges the government-guaranteed terrorism reinsurance backstop.

Principal among the concessions is an agreement by the Treasury that any additional premium it receives from the pool will continue to be offset against a loan payable by Pool Re should the Treasury be called upon to pay a claim.

HM Treasury had proposed a significant increase to the retrocession premium it receives from Pool Re in return for guaranteeing the pool should its funds be exhausted by a payout after a terrorism loss.

HM Treasury currently receives 10% of Pool Re’s funds, which are collected via a levy charged to insurers that participate in the pool.

Pool Re said in a statement that members of the pool will vote on the Treasury proposals at the extraordinary general meeting slated for Friday.

“Without members’ approval of these proposals, the Treasury has warned that it will cancel its agreement with Pool Re with effect from Jan. 1, 2016,” it added.

Pool Re said it had continued to negotiate with the Treasury and had secured “a number of very significant concessions and clarifications.”

London-based Pool Re said the Treasury had indicated it would accept certain proposals put forward by Pool Re to modernize the fund and make it more relevant to small business, among other things.

In a letter sent to Pool Re CEO Julian Enoizi, Charles Roxburgh, director general of financial services at HM Treasury, said the Treasury supports the desire to modernize Pool Re.

“We note that the premium rates currently charged by Pool Re require amendment to ensure pricing continues to be fair, reflective of risk and affordable,” Mr. Roxburgh said in the letter, extracts of which were included in Pool Re’s statement Tuesday.

He said the Treasury is awaiting a submission on risk reflective pricing from Pool Re that is expected in March.

In addition, Mr. Roxburgh said the Treasury looked forward to receiving detailed proposals from Pool Re in March about ways to allow insurers to offer small businesses outside of peak terrorism zones simpler products to encourage greater takeup of coverage.

The Treasury also said it would make an exception to the government’s standard policy not to purchase commercial insurance or reinsurance, and would support Pool Re in making presentations to the market to secure external retrocessional coverage from March 2015.

Mr. Roxburgh said “the purchase of reinsurance in the market is the best mechanism for the re-engagement of the global market in U.K. terrorism and, thus, the possibility of a return to a normal market in time.”

The Treasury also indicated that it would be happy for Pool Re to consider allowing its members to offer buyers premium credit for risk management measures or increased deductibles — a proposal the U.K. risk management association, Airmic Ltd., has been lobbying for.

“Whilst the negotiations of the past nine months have been lengthy and complex, the outcome being proposed to members will improve the position of all stakeholders of Pool Re once implemented,” Mr. Enoizi said in the statement.

Pool Re was set up in 1993 after a series of Irish Republican Army bombings on the U.K. mainland. Most U.K. insurers and Lloyd’s of London syndicates are members of the pool, which offers them reinsurance — including for chemical, nuclear, biological and radioactive attacks — for the inclusion of terrorism coverage in property policies should buyers request such cover.