The UK Government intends to amend the Reinsurance (Acts of Terrorism) Act 1993 to enable an extension of the cover provided by Pool Re, the government-backed terrorism reinsurer.
According to a statement by John Glen, the economic secretary to the treasury, the amendment will extend Pool Re’s coverage to include business interruption losses that are not contingent on damage to commercial property.
Presently, the reinsurer is limited by the 1993 Act to only pay out in an instance when physical damage has occurred to commercial property.
Businesses inside a police cordon that suffer financial losses due to loss of access to their property or trade are only covered if there has been physical damage during a terror attack.
Pool Re had identified the potential protection gap and suggested its cover be extended to ensure continued effectiveness in the face of an evolving threat.
The reinsurer has already collaborated with the government over the increased threat of cyber attacks and from April 2018 it will extend its cover to include material damage and direct business interruption caused by acts of terrorism using a cuber trigger.
Julian Enoizi, chief executive, Pool Re, said: “We welcome and applaud the government’s commitment to amend the 1993 legislation to allow Pool Re to be the first of the global terrorism pools to overtly extend its cover to include terrorism-related non-damage business interruption.”
“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-sized enterprises and regional businesses across Great Britain, will increase the resilience of the economy.”
Glen said the government remained committed to “ensuring that businesses can continue to secure insurance against the financial cost of terror attacks”.
He added: “I will announce further details in due course.”