Terrorism reinsurer Pool Re has issued a new model for the reinsurance scheme, backed by its members and the HM Treasury.
Pool Re’s proposals to convert its reinsurance arrangements from the current facultative obligatory treaty to an annual aggregate catastrophe excess of loss treaty will take effect in April 2025.
This modernisation is a core element of the Scope of Works programme agreed by Pool Re’s members and the HM Treasury, following the last review by the government concluded in March 2022.
The transformation introduces risk-adjusted pricing, simplifies reporting and offers members customised retention levels to manage terrorism risk.
The new model ensures that the principles and coverage of the scheme remain while introducing underwriting flexibility for members in terrorism commercial property damage and business interruption risks.
Tom Clementi, Pool Re chief executive officer, emphasises: “Our job was always to correct a market failure and to provide opportunities for the industry to take more terrorism risk onto its own balance sheet and normalise the market.
“The change to an aggregate catastrophe excess of loss treaty is a good outcome for both members and the taxpayer.”
Bim Afolami, economic secretary to the Treasury, states: “Pool Re has worked hard on its plan to modernise its reinsurance offering, and its proposals are supported by its members as well as the government.
“I look forward to seeing the impact of the change for members, customers and the terrorism insurance market.”
Pool Re, established in 1993 in partnership with the UK Government, provides reinsurance for terrorism-related losses, covering risks and supporting the financial security of more than £2 trillion in assets across businesses.
