Pool Re announced it has renewed its retro program and extended the cover to include material damage and direct business interruption (BI) caused by acts of terrorism “using remote digital interference.”
The renewed cover, brokered by Guy Carpenter, has been increased by £100 million to £2.1 billion ($2.9 billion) and has been placed with an expanded panel now comprising 47 reinsurers, with Munich Re continuing to be the largest market.
The three-layer program matches the cover provided to Pool Re member insurers, with cyber terrorism now included along with chemical, biological, radioactive and nuclear risks. This represents the most comprehensive and largest terrorism retro placement in the world, said Pool Re in a statement.
“This retrocession programme represents a significant milestone for Pool Re and the culmination of months of collaboration, not only with our reinsurance panel and Guy Carpenter, but also with Cambridge Centre for Risk Studies who provided the research into cyber terrorism,” said Julian Enoizi, chief executive, Pool Re.
“We have sought to make the cover we provide truly reflective of the risks our member insurers face and also to future proof the scheme to ensure it represents the most comprehensive terrorism reinsurance cover possible,” he added.
“The appetite to engage with the program has been exceptional and reflects the reinsurance market’s comfort with the risk and the modeling information provided by Pool Re,” Enoizi said, noting that Pool Re will continue to seek to extend the program, in line with cost and security parameters.
James Nash, president, international, at Guy Carpenter, said: “Guy Carpenter is delighted to have worked with Pool Re to not only grow the retrocession limit to £2.1 billion but also extend the cover to include damage by remote electronic means. This closes a gap in coverage at a time when cyber-attacks have never been higher on the industry’s agenda of concerns.”
About Pool Re
Pool Re was formed in 1993 by the insurance industry in cooperation with the UK government in the wake of the IRA (Irish Republican Army) bombing campaign on the UK mainland. Structured as a commercial reinsurer, Pool Re is a mutual whose members comprise the vast majority of insurers and Lloyd’s syndicates which offer commercial property insurance in Great Britain. Ceding terrorism risk to Pool Re affords member insurers a guarantee ensuring that they can provide cover for losses resulting from acts of terrorism, regardless of the scale of the claims.
Pool Re is owned by its members but underpinned by the UK Treasury’s commitment to support the company if ever it has insufficient funds to pay a legitimate claim. In return for that commitment, Pool Re pays a fee to the government. If it ever uses this support, it would repay the money over time from future premium receipts.
However, in the event of a loss resulting from an act of terrorism, each member must first pay losses up to a threshold which is determined individually for that insurer. When losses exceed that threshold, the insurer can claim upon Pool Re’s reserves, which now stand at approximately £6.5 billion ($9.0 billion).
Source: Pool Re
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