How the Scheme Works

Most insurers providing commercial property and consequential loss (more commonly referred to as business interruption) insurance in the UK are members of Pool Re and have agreed to offer terrorism cover, as defined under the scheme, to any client or prospective client who requests it as part of the relevant commercial policy they issue.

The list of participating insurers is shown here. All the most significant providers of commercial property insurance in the UK take part, including many overseas companies and Lloyd’s syndicates.

On request by a policyholder, an insurer participating in the Pool Re scheme will quote a premium for the inclusion of terrorism cover. If accepted, it will then become part of their commercial property (or other relevant) policy. Alternatively, the insurer may simply include terrorism cover within its standard policy without the need for separate consideration by the insured. The cover provided is for losses resulting from damage to property caused by an act or acts of terrorism. If the commercial insurance policy also includes business interruption then terrorism cover can be provided for this risk. This cover may be provided as part of a commercial property policy or on a separate policy. (For more detail about the definition of an act of terrorism click here, and about the cover provided, click here).

Any policyholder which has taken this cover and sustains losses as a result of damage from an act of terrorism should contact their insurer who will arrange for the claim to be considered under the usual procedures.

Pool Re has arrangements with all its members to reimburse them the cost of claims they pay under the terrorism cover they provide, subject to a loss retention which they must pay themselves. Insurers pay premium to Pool Re for this cover. The retention varies between insurers depending upon the size of their terrorism insurance portfolio.

If losses ever became so large as to exhaust its reserves, Pool Re would draw funds from the UK government to meet its obligations. Pool Re, in turn, pays a premium to government for this cover and would be required to repay any funds drawn down in this way from its future income.