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Pool Re may cover undamaged businesses interrupted by terrorism

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Terrorism cover

Pool Reinsurance Co. Ltd., the U.K. government-backed terrorism reinsurance backstop, will be allowed to cover losses incurred if a business cannot trade or is prevented from accessing its premises in the wake of a terrorist attack.

The Counter-Terrorism and Border Security Bill 2018 secured royal assent, meaning legislative approval, according to a statement released on Tuesday. Before the law was changed, Pool Re could only reinsure losses incurred if a company’s premises had been physically damaged by terrorists.

“The gap in insurance coverage was highlighted in the 2017 attacks on Manchester and London Bridge, where small and medium-sized businesses were shown to be particularly vulnerable with several caught behind police cordons or experiencing a reduction in footfall following the events,” the statement said. “They suffered significant, and in some cases crippling, business interruption losses for which they could not be compensated either because they had not purchased terrorism insurance or because the cover excluded business interruption if their premises had not been damaged.”

Pool Re was set up in 1993 to protect businesses and the insurance industry from the impact of the IRA’s mainland bombing campaign, which targeted high-value infrastructure and prioritized economic disruption, but current terrorist threats in the UK and across Europe are very different, more frequent and often less sophisticated, according to Pool Re. Recent terrorist attacks have not necessarily resulted in physical damage to premises, which is problematic because most terrorism programs were set up to primarily deal with damage to property, the organization said.

“It’s the sad reality that business owners across the country now have a new set of perils that threaten their livelihoods,” Steve Coates, Pool Re’s chief underwriting officer, said in a statement. “This amendment is a real turning-point for our industry’s ability to deliver the comprehensive protection businesses have been waiting for, but they’ve got to make the jump and buy the policy and we have worked hard to make the new cover as accessible and affordable as possible.”

“Our priority has been to keep this as far as possible a private market solution and so it will be reinsured by us via a new program,” Julian Enoizi, Pool Re chief executive, said in the statement. “As we continue to identify and understand the protection gaps which emerge and bridge them through this unique public-private solution, we are focusing on helping the industry to grow by ensuring it becomes more comfortable with the exposure and thus reclaims more and more terrorism risk as we have seen recently with growing retentions and being able to cease contingency cover altogether.”

Citing ample capacity in existing markets, Pool Re said in January it would cease writing terrorism contingency cover previously offered to its members, beginning after the first quarter.

 

 

 

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