The Pool Re scheme was designed to address a particular risk at a particular time, namely the threat of the IRA’s large vehicle bombs and their financially devastating consequences for commercial property and the economy. Since the late 1990s, however, this risk has receded, to be overtaken by new and challenging threats, and our cover has evolved to reflect this.
From an attack perspective, the contemporary terrorist threat is more diffuse and complicated than ever before. The threat of ‘spectacular’, 9/11-style attacks remains a tangible risk. At the same time, however, rather than focussing exclusively on destructive damage to the organs of state (such as government buildings, financial. infrastructure, or targets associated with the army, police and judiciary,) modern Islamist, and, increasingly, right-wing extremists are opting for soft, civilian targets in crowded places. This shift increases the industry’s focus on Business Interruption (BI), liability and casualty exposure.
The protection that we provide to our Members allows them to offer to UK Plc cover that reflects the changing nature, priorities and methodologies of terrorism. Post-9/11, we incorporated Chemical, Biological, Radiological and Nuclear threats into our cover.
In 2018, we incorporated business interruption losses not contingent on damage to property following the spate of attacks in 2017. In fact, we have not only kept pace with the threat, but in some cases pre-empted it, future-proofing the scheme in 2018 against damage by a remote digital trigger, the first global pool to do so.
Although the cover provided by Pool Re at the inception of the scheme in 1992 was restricted to damage caused by ire and explosion, it is now much wider. In 200, cover was widened to ‘All Risks’ with only two explicit exclusions – War and electronic risks.
In 2016/17 it became evident that there was a possibility that terrorists could cause damage by remote digital means and that the scheme would exclude such damage. After a significant piece of research from the Cambridge Centre for Risk and in collaboration with HM Treasury, it was agreed that from April 2018, Pool Re would cover damage caused by remote digital interference.
Subsequently in 2019, Members were given the option to reinsure non damage business interruption in light of the gap in cover that became evident in the aftermath of the London Bridge attack in 2017. This required an Act of Parliament which came in the form of the Counter Terrorism and Security Bill in 2019.
Expansion to NDBI and cyber covers are examples of the continued success of the private-public approach, reducing gaps in cover and vulnerabilities.
Frontier Economics, An Economic Assessment of Terrorism Insurance in Great Britain, 2018.