UK to expand terrorism reinsurance coveragePosted On: Mar. 22, 2018 11:39 AM CST
The U.K. government has agreed to amend a 1993 law to allow its government-backed terrorism reinsurance backstop to cover non-damage business interruption losses resulting from acts of terrorism.
Pool Reinsurance Co. Ltd. is currently restricted by the 1993 Reinsurance (Acts of Terrorism) Act to pay out only if physical damage has occurred to commercial property. This means businesses inside a police cordon that suffer financial loss by being unable to access their property or to trade are only covered if there has been physical damage during a terrorist attack, according to a Pool Re statement issued Thursday.
Pool Re had identified the potential protection gap as a result of the spate of attacks across Europe in 2015 and 2016, but the terrorist attacks in Westminster, Manchester and London Bridge highlighted the actual impact of the gap in UK provisions for terrorism insurance coverage, according to the statement.
“This amendment will close the terrorism insurance gap for businesses up and down the country, which, combined with our efforts to make cover more affordable for (small and medium-size enterprises) and regional businesses across Great Britain, will increase the resilience of the economy,” Julian Enoizi, Pool Re chief executive, said in the statement. “Businesses can be confident they will be covered in the event of a terrorist attack and able to get back on their feet quickly for the benefit of their community, customers and suppliers.”
Pool Re has already extended its cover to include material damage and direct business interruption caused by acts of terrorism using a cyber trigger.
In 2017, there were five terrorist attacks causing 36 deaths and more than 300 injuries, according to a Pool Re report published in February.
The threat level from international terrorism for the UK is severe while the threat level from Northern Ireland-related attacks to Great Britain is substantial, the mutual insurer noted in its report.