TOTALLY Terrorism Episode 9:
Tom Clementi: How insurance plays a role in managing terrorism threat
Episode #009 - Tom Clementi - How insurance plays a role in managing terrorism threat
Tom Clementi is the Chief Executive Officer of Pool Re. Tom joined Pool Re in April of 2022, following a career spanning law, strategy, business, and insurance. Since joining Pool Re, Tom has overseen the company’s transition to an Arm’s Length Body of the UK Government, continued to ensure that UK terrorism insurance remains fit-for-purpose in the face of an evolving terrorism threat, and overseen the growth and development of Pool Re's advisory and consulting division, Pool Re Solutions.
In this episode we talk about Tom’s career prior to Pool Re, his own experiences of terrorism, a brief history of Pool Re, and how the organisation has evolved alongside the UK terrorism threat. Tom shares his own perspective on how insurance can play a crucial role in building resilience for both business and the UK economy, his own understanding of terrorism threat, and how the threat could change in the next five to ten years.
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Threat Analyst: Oliver Hair
Hello and welcome to Totally Terrorism, a Pool Re podcast. My name is Oliver Hair, a Threat Analyst at Pool Re. In this episode, we're joined by Tom Clementi, the Chief Executive Officer of Pool Re. We'll talk about his own personal experiences of terrorism, the background of Pool Re and its continued importance in the face of an ever evolving terrorism threat, and get Tom's own thoughts on how he thinks the terrorism threat will evolve in the next 5 to 10 years. We hope you enjoy this episode of Totally Terrorism and if you would like to hear future episodes, please like and subscribe through your streaming app of choice or sign up for regular updates through our Solutions Centre at poolre.co.uk/solutions-centre.
Tom Clementi… Welcome to Totally Terrorism.
Guest Expert: Tom Clementi
Thank you very much, Ollie, really good to see you.
Threat Analyst: Oliver Hair
So, Tom, for those of our listeners who may not be familiar with you and your background, I just thought it would be appropriate for you to tell us a bit more about your background before Pool Re and your career so far.
Guest Expert: Tom Clementi
Yeah, sure. So, I'm Tom Clementi, I'm the Chief Executive of Pool Re. I've been doing that job since April of 2022. I don't know exactly how far you want me to go back, but in terms of my working life to date, I did a liberal arts degree at university and like many people who did liberal arts degrees around the turn of the century, I didn't quite know what to do, so I ended up becoming a lawyer because that meant going to law school and being a student for another couple of years. So I did a couple of years at law school and then ended up at a top notch law firm called Linklaters and I qualified into the corporate department at Linklaters, which is a fantastic firm. But I sort of realised during my brief time there that I probably wasn't going to be a lawyer for the rest of my life, so I applied to Business School. I ended up doing an MBA at INSEAD Business School, half in Singapore and half in Fontainebleau, just outside of Paris, which was great. And that was really a platform for me to transition away from an advisory role as a lawyer into the commercial world and I joined the Lloyds insurance market and I worked for Amlin PLC, initially in a strategy role. But I did a whole range of jobs at Amlin PLC, which was a FTSE 250 listed insurance company. It was subsequently taken over by a big Japanese conglomerate called Mitsui Sumitomo in and around sort of 2016, and I ended up running the Lloyds business of MS Amlin, Mitsui Sumitomo Amlin from about 2016/17 through to the end of 2020. And then eventually found my way to Pool Re. So yeah, really law through insurance into sort of the world of terrorism insurance.
Threat Analyst: Oliver Hair
Sure. That's really interesting and something I'd like to explore a bit now if we can. So we'll come on to the history of Pool Re itself and the background and the weird world within which we sit, sitting between insurance and terrorism understanding. You clearly have vast experience across sectors, but also a lot of experience within the insurance sector. Is there anything within your background or your experiences prior that really made the role of CEO of Pool Re stand out? Being a terrorism reinsurer, have you had an interest in terrorism beforehand or any kind of experiences that kept it in the back of your mind maybe?
Guest Expert: Tom Clementi
Well, I mean, I absolutely love my job. And I can bang on about how great I think Pool Re is till the cows come home. But I've always been interested, well, from a relatively young age in politics, in current affairs, certainly from university onwards in international relations and geopolitics, I've always found that very, very interesting. I can't pretend that I was reading books around terrorism in, you know, age 5 or 6 or anything like that, but very interested in geopolitics. And I suppose that brings you into sort of terrorism to some degree.
I mean in terms of my own interactions with terrorism, look, I’m fortunate in that despite living in London, I've not really been too impacted. I mean, I remember the events of 7/7 when I was working in London and I was pretty close to that. And I was also in New York on 9/11. So I was actually standing about two blocks away from the World Trade Centre when it fell down. I’d flown in to New York on September the 10th. And thanks to jet lag, I got up pretty early on the morning of September the 11th and I'd headed downtown. I'd actually been to New York, I think the year before and been up the top of the World Trade Centre. So I thought well I don't need to do that again cause I've done that, but I'll head down to Battery Park, I'll get on a ferry and I'll head over to Staten Island. So I was actually on the subway when the planes hit, and when I got out of the subway because the subway was heavily delayed and so basically came to a halt, I got out and I was quite near the church close to Wall Street, looking up at these two enormous buildings on fire, sort of craning my neck upwards. And then literally within minutes, the first tower fell. And I remember just sprinting away and I think there was about a two second, maybe 3 second wait, where I saw the tower come down and then this sort of mushroom cloud of dust and debris kind of move in the opposite direction and starts sort of spreading out. I thought Christ, so literally turned and ran. I remember running, running down this street and then there was just this big sort of Hollywood style ball of dust, like a big cloud of dust moving at what seemed like 100 miles an hour left to right along the avenue at the end of the street I was running along. I thought, well, I can't, I can't run into that. So I turned around and actually the dust ball had already gone down the avenue at the other end of the street, I thought, well, I'm now going to be completely immersed in this, in this stuff. So I kept on running and got down to sort of FDR drive, sort of Franklin Delano Roosevelt Drive, which is, sort of sweeps around the bottom of Manhattan. And we stopped running when we were on there. I've never seen quite so many emergency vehicles come in the other direction, and that's when the second tower fell down. And then, you know, pandemonium really did break out. And I remember thinking, God, should I run over the Brooklyn Bridge and into Brooklyn? And I'm thinking, well, maybe the Brooklyn Bridge is going to fall down. You sort of, when you start seeing massive bits of infrastructure just falling over, you sort of lose your faith in bridges to remain kind of upright. So I didn't run over the bridge and ended up going all the way around FDR drive all the way back up to, well north of Midtown, I was sort of Upper East Side where I was staying. And so it took me about, til about 4:30 in the afternoon, New York time, before I got there. And that's where I saw on TV what had happened, the first time I even realised that a plane had flown into the building. So anyway I tell that story. So that was my sort of brush with terrorism, obviously a really, really tragic day and saw all sorts of things that day you never want to see again.
Threat Analyst: Oliver Hair
Yeah, that is absolutely fascinating. And thanks for sharing that, Tom. That's also, thankfully, a more visceral and first-hand account than most people get when it comes to terrorism. Having said that, the US isn't alone in its experience of major terrorism events, whether that be attacks against infrastructure, people or, in the case of 9/11 and the worst case scenarios, both. Which brings me on to a question more so around Pool Re the company. Perhaps we could now explore why Pool Re were formed and your perspectives on that and perhaps a bit of a history around the business itself.
Guest Expert: Tom Clementi
So Pool Re and I mean Re is just short for reinsurance because we are a reinsurance company. So the origins of Pool Re go back just over 30 years to the early 90s. It was the Provisional IRA's mainland bombing campaign, predominantly in London, but also elsewhere on the mainland, that saw, you know, a number of, you know, bombs. And it was in particular the Baltic Exchange bombing. So the bombing of the Baltic Exchange in April 1992, in fact, the day after John Major's surprise election victory, and in the wake of that bomb, the insurance market, indeed the reinsurance market as well, largely in continental Europe, just withdrew capacity for terrorism. They said look, we are no longer covering these large buildings, commercial property against terrorism because the, you know, the losses are enormous and the uncertainty is too great. So you know the losses are becoming untenable. So the insurance market pulled out. So what you had was a clear and evident case of market failure and the government of the day, this is John Major's Conservative government, determined that it could not afford to leave the UK economy unprotected against this peril that it was seeing on the streets of London and Manchester. And without terrorism insurance cover, you know, banks wouldn't lend and construction companies wouldn't build. And there were severe implications for UK PLC. So government and industry came together to address this issue in a public private partnership to address an issue that neither could really satisfactorily resolve on their own. So Pool Re was formed in 1993 and it's a public private partnership. And Pool Re provides unlimited terrorism insurance cover to the UK insurance industry. And we charge a premium to UK insurance companies for reinsuring them against terrorism and that premium allows us to build up a pool, hence our name. So it's a pool of, if you like, private sector capital, but we're also backed by the government. So should our pool of capital be exhausted in the wake of a terrorism event, we would call on an unlimited guarantee which we enjoy from Treasury, which would step in. Now in our 30 year history, we've never, never yet called. I'm touching wood, we've never yet called or had cause to call on that HMT guarantee. And we've now grown a pool of 7 billion or just north of 7 billion, and then with various other things that we do, we buy our own reinsurance without getting too technical which is called retrocessional reinsurance and some of the assets that we've deposited at HMT over the last few years in return for the unlimited guarantee we have now built up a financing structure of around about £12 billion. So it's probably a terrorism event that causes £12 billion worth of property damage before we're calling on the Chancellor of the Exchequer of the day to write a cheque.
Threat Analyst: Oliver Hair
Sure. And fingers crossed that doesn't ever happen. You mentioned that Pool Re was formed in 1993, just over 3 decades ago now. Pool Re at that time was obviously necessary, evidently necessary, and created for then a very, very specific reason. However, I guess terrorism itself has changed a lot since then, a lot of time has passed, and having that fund of money behind us now with a new and evolving threat. I guess my question would be, how does Pool Re and how does your role within Pool Pe keep us relevant within an entirely different and changed threat landscape?
Guest Expert: Tom Clementi
Well, relevance is key for any business, whether you’re, you know, flogging insurance or flogging tennis rackets, you know, relevance is key. I mean, Pool Re, as you say, was formed just over 30 years ago, and our purpose as an organisation, which was true then and is true today, is to provide confidence and resilience to the UK economy in the face of the terrorism. Now terrorism 30 years ago was quite different to the terrorist threat that we see today. And I think if you want to remain relevant as an organisation, you have to make sure that your offering, your proposition to your customers, evolves to meet the needs of those customers. And so as the terrorism threat has evolved, so too has Pool Re and it's very important that the coverage that we provide is as comprehensive as our stakeholders would expect it to be. It's always very annoying, isn't it? As a, as individuals, when we suffer a loss and we phone up our insurance company and we say we'd like to make a claim and they say I'm terribly sorry, but we don't cover that. You think what? So actually I think you know there's always, I think, across lots of different classes of insurance business whether it's you know, car insurance or property insurance, travel insurance, a bit of an expectations gap and what people think they've got cover for and what they've actually got cover for could be two very different things. And that gap needs to be plugged with sort of awareness campaigns and insurers being very clear about what they’re covering.
But back to your question, yes, so when we were set up, it was the IRA. Yeah, that was the terrorist threat essentially that we were facing. And back then, you know, terrorism organisations such as the IRA were pretty well structured, well organised, hierarchical, you know, you had your card carrying members of the IRA and you sort of knew who your terrorist was and who you were dealing with. And over the last 30 years, you know, that's changed. And I think the terrorism threat has become considerably more, more nebulous and more diffuse. I mean, the terrorism event you're most likely to come across now in in the UK is a, let's say a confused teenager who spent much of his or her time during COVID online, on YouTube, becoming radicalised and has gone out and bought a bread knife, let's say, from Robert Dyas and decided to undertake a marauding knife attack in a market like Borough Market just over the bridge from here. So low sophistication, often self-initiated lone wolf-style attacks. Now of course the threat’s pretty polarised, because you've still got the potential for what we call CBRN, you know, which is chemical, biological, radiological and nuclear. So it's very remote. It's kind of a real tail risk, but you could still see a CBRN event that involves us having to sort of decontaminate half of Birmingham or half of London, which would be a multibillion pound undertaking. So that's still a possibility, but extremely remote. You've also got the sort of 9/11 style event involving, let's say multiple aircraft and multiple large buildings, let's say Canary Wharf in the London context. Again multi, multi billion pounds worth of losses. But those are pretty remote tail events. You're far more like to see the sort of knife attack I explained, which might well lead to several people very tragically dying, but probably isn't going to cause billions, sorry, cost billions of pounds worth of property damage. So anyway, over the last 30 years the threat’s changed and so the IRA has broadly gone away, thankfully. Irish Republican terrorism is not dead, but it's very much, you know, the volumes been turned down considerably. What we've seen over the last 30 years is obviously the rise of Islamist extremism and that's the predominant terrorism threat I think we face today. But you've also seen that far right extremism on the rise. And then there's probably a rag bag sort of residual cocktail of various incoherent grievances which make up kind of the balance. But if you speak to the counterterrorism police and some of the intelligence agencies, let's say 2/3 of their caseload is Islamist extremism and maybe roughly 1/3 is the far right, and then you've got that residual cocktail I mentioned. So yeah, the threat’s evolved, and so too has our cover because we started off back in the early 90s providing basic fire and explosion, and then post 9/11, we started to offer CBRN coverage, which is chemicals as I say, biological, radiological and nuclear, and as I say it's unlimited terrorism cover we provide. And then more recently we provided non-damage business interruption cover. So that was in the wake of the Borough Market incident where what you found was, you know, a marauding knife attack and some tragic consequences in terms of a small number of fatalities but limited property damage. But what did happen was that the police came along and threw up a cordon and a bunch of pretty small businesses were denied access to their premises. And so they didn't suffer any physical damage, but they couldn't actually trade. And if you're a small business and you can't trade for two or three weeks, then you're potentially in real difficulty because you don't have the economic reserves to withstand that kind of period. And so what we found at the time was that, well, we couldn't respond to those businesses that had suffered losses because we could only really respond to those who suffered physical damage. So in the wake of Borough Market we extended our coverage to include non-damage business interruption. And then even more recently we've included a sort of remote cyber trigger as well so that if there was someone, for the sake of argument on a keyboard in Moscow, that managed to blow up a building and that person was a terrorist, then we would also cover the subsequent losses. So the cover’s evolved over 30 years and I think it's important that we don't stand still, and we need to keep thinking about what more we can do to remain relevant.
Threat Analyst: Oliver Hair
In terms of what we can do, I guess I've got a two point question off the back of what you've just said. As we've mentioned, the terrorism threat has changed and therefore the likely impact or the ways in which a business could be impacted have also changed. Firstly, do you think businesses are aware of the threat and if they're not, from your perspective, how can insurance and the work of Pool Re be an important tool in a business's risk management strategy? Many of our listeners likely come from, I guess, a security, threat or risk consulting background and may not be fully aware of the crucial role that insurance can play. Could you perhaps explain in your own words what role insurance and therefore Pool Re can play for perhaps particularly smaller size businesses seeking to become more resilient to the terrorism threat here in the UK.
Guest Expert: Tom Clementi
Well, yeah, there's a lot in that. I think in terms of awareness of terrorism, clearly I think you know people in the UK are aware of terrorism, they've seen terrorist attacks over the years, particularly if they're over, you know, 40 for instance. And they're well, well familiar with the IRA back in the day. But obviously, you know, they've seen terrorism events elsewhere in the world. And perhaps slightly smaller terrorism events here in the UK. So I think there's a broad awareness that terrorism can happen. But I think very few businesses really sit down and think about how terrorism could impact their business, largely because they probably don't see themselves as being a terrorist threat. And I think what speaks to that lack of awareness about the threat is the take up of terrorism insurance really. So, not that long ago, the Federation of Small Businesses did a survey which found that something like 4% of SMEs, so small and medium sized enterprises in the UK are currently buying terrorism insurance. So it's a very small number of SMEs. Clearly larger, larger corporates are more likely to buy the product and if you're in London, central London for instance, you're more likely to buy it than if you're in Ludlow or somewhere in Shropshire. So yeah, awareness is relatively low and I think that insurance can play an important role in spreading awareness and also in incentivising good, preventative, risk mitigating behaviour and that's what, you know, Pool Re Solutions, the consulting arm of Pool Re, spends a lot of time doing. So there is a role for us to play in in threat awareness and Pool Re has its own Pool Re Solutions Centre on our website which has a number of materials there that are designed specifically for small businesses to help them understand, you know, what the threat might look like and some basic things that they can do to help mitigate that threat. So that's really important. And then in terms of incentivizing good behaviour. I mean for certain of our ultimate policyholders that fulfil certain criteria, tends to be some of the larger policyholders, they are potentially able to get discounts. So we have something called VSAT which you know all about Ollie, which is our vulnerability self-assessment tool. And if you can complete that self-assessment and pass with flying colours or close to flying colours, then you could be entitled to up to a 10% discount on your terrorism premium. So again, that's an incentive, and I think that's one of the really powerful things that the insurance industry has in its toolbox. It's that ability to incentivize good behaviour through risk-based pricing. In the same way that, you know, you don't go on holiday and leave your doors and your windows open. If you did that all the time or didn't lock your car, etcetera, then you probably have a higher insurance premium to pay. But by taking sensible preventative steps to mitigate the risk, you can actually reduce your premium. So we incentivize good behaviour which is important because I think prevention is cheaper than cure.
Threat Analyst: Oliver Hair
Absolutely. And I think the importance of, as you say, prevention rather than cure can't really be stressed enough.
Relatively recentl,y and I will change tack slightly here, but it feeds into how we at Pool Re I think seek to aid business in preparing for the worst, rather than clearing up after it. Pool Re recently became an arm's length body to His Majesty’s Treasury. I'm wondering if you could expand a bit more on the process for our listeners, what it perhaps means for our relationships across the public sector, but also explore how that's enabled us at Pool Re to better understand the threat and ensure therefore the UK economy remains as resilient as possible to the threat from terrorism.
Guest Expert: Tom Clementi
Sure. Yeah. So it was only a few years ago that the Office of National Statistics, the ONS, classified us, classified Pool Re as a central government entity and the Cabinet Office then allocated us to HM Treasury. So we are an arm’s length body of His Majesty’s Treasury and we signed our framework agreement, which regulates the relationship between us and the Treasury in May of 2022, so actually very shortly after I joined, it's one of the first things I did. And as a result we now have to, you know, comply with the public contract regulations, which means we have to do government compliant procurement exercises. We're also deemed to be managing public money so we have to abide by all those rules and regs. But I think a lot of that is actually good, sensible behaviour, you know, it's good practise as a sort of responsible citizen, a responsible corporate citizen. I think more importantly, actually becoming part of the central government family has giving us access to organisations and agencies that we would have had contact with in the past, but it sort of enabled those relationships to become deeper and more meaningful. So we now have access to intelligence and information and people that we would not have had previously. And that's really important because as you know, doing what you do in the Pool Re Solutions team, understanding the threat and not just understanding the threat today, but how the threat might manifest itself on a five year view is really important. And that's really important I guess for two reasons. First of all, we're in the job as a reinsurance company of pricing terrorism. If you’ve got to price terrorism, you’ve got to understand. Well, you know what are the frequency assumptions? How likely are these sorts of events to occur? And if they do occur, what are the sort of, what's the impact going to be in terms of severity? So really understanding the threat is important to inform the assumptions which feed Pool Re’s pricing. But secondly, it's our job to make sure that our Members, these are our Member insurers, the insurers that we reinsure, to try and help them understand the threat, because our job, and this is a mandate we're given by central government, is to try and return more and more risk back to the private market. So I talked earlier about how the government provides us with an unlimited guarantee, so we have the government backstop. But the government wants to make sure that backstop is as far away from, you know, dealing with the financial implications of terrorism as possible. So we're trying to help the private insurance market for terrorism grow. And of course, if you can help the private insurance market understand the threat, you're more likely to get insurers to provide cover because insurance companies like certainty. They like to understand what they're covering, and if there's uncertainty around what they're covering, they’re not really sure what it is. They're probably going to be less likely to cover it and more likely to exclude it. So yeah, I think understanding the threat, really important for us as a reinsurer in pricing the risk, but also important to spread the word to all of our stakeholders to try and attract more capital and more private sector capacity to provide cover to distance the British taxpayer from picking up the tab should there be a big event.
Threat Analyst: Oliver Hair
Sure. That's really, really important and hopefully something that this podcast, Totally Terrorism is doing in aiding our listeners to better understand terrorism as this sometimes hazy and mysterious thing. In terms of the threat, we've spoken a lot about how it's changed from when Pool Re was formed, even prior to that and all the way through to the more hierarchical Islamist groups and your own experiences of the tragic events of 9/11, into now, a more diverse, uncertain and unpredictable threat. From your perspective, where do you currently consider the UK's biggest threats to be coming from? I mean, I know we've touched on the increasing diversity of threat, but more importantly, maybe. In the next, let's say 5 to 10 years, where do you see the threat going and how do you see Pool Re continuing to play a role in countering it, remaining relevant or making the UK more resilient against it?
Guest Expert: Tom Clementi
Well, as we said earlier, I think the predominant threat we face today is a threat from Islamist extremism, with the far right groups, you know, activity associated with far right groups being on the rise. But you know, looking further ahead, you have to be, I think, reasonably imaginative. It's very hard as you know, to predict these things. I think, you know, we're looking at the cyber threat, we're looking at or beginning to look at artificial intelligence and what that could mean for not just the terrorism threat, but also our ability to counter it. I think you know, artificial intelligence massively increases the surface area for cyber events, cyber-attacks, and I think you know ransomware, which we're seeing a lot of is already a plague on Western institutions. Now, I think I think really sophisticated cyber capabilities predominantly sit with states at the moment and I’m talking about hostile cyber capabilities sit with States, but you know, what sort of intelligence and capabilities States have today may well be in the hands of terrorist organisations within 5 to 10 years. So I think there's a concern we have to keep a close watching eye on, you know, artificial intelligence and cyber and quantum computing, which could massively increase the power and the volume of cyber-attacks. So there's the possibility that that becomes a significant threat, and if you like terrorism, moves away from being much less about Semtex in the world of the IRA and much more about cyber, much less about, you know, property and bricks and mortar and much more about intellectual property. So we're concerned about that. I think in terms of artificial intelligence at the moment and we've had some preliminary discussions about this, we're doing some work on it at the moment. You know it's not clear that artificial intelligence in the short term is going to change the threat vector, the sort of methodologies that terrorism might use, but it could massively facilitate terrorists in using preexisting methodologies. You know, it could massively cut down the amount of time it takes to do reconnaissance, or plan or design devices, etcetera that you might want to use. So that's definitely one area we look at, but we also look at other organisations which you know are relatively peaceful today that might be protesting in relation to social injustice or climate change and think well, on a five year view, could those become terrorist organisations? Are there elements within those groups that show sort of a tendency towards violence? And so should we be tracking that? Yes, you know, so those are a couple of areas I think. But you, you mean you're close to this as well, so perhaps you've got some views you want to share.
Threat Analyst: Oliver Hair
You've covered a lot there and I think something that we at Pool Re Solutions, a part of Pool Re as Tom has mentioned, look at constantly at the moment is increases in the use of AI, both non-maliciously but also by terrorist actors here in the UK, but also globally. The question of state threat is one that we've been looking at for what seems like years now, and the blurring of the boundaries between what is considered or could be considered or designated as state threat and what could be designated as a kind of non-state terrorist actor, terrorist act, sorry. We increasingly see the use of proxies and third party criminal organisations by states to do just that, to make it harder to attribute this kind of attack when they do it. So it is a hugely complex question and you've done very well to bring up a fair few points there.
Guest Expert: Tom Clementi
Yeah. And I mean, you raised an important point because, I mean, state threats have become more prominent, particularly, you know, in the last couple of years or so. I mean, it feels like, you know, barely a week goes by without more reports of whether it's sort of, sort of civilian shipping in the Red Sea or, what's going on in in Ukraine or Gaza. Yeah, there are always reports of stuff going on. And so I think that it calls into question where is that line of demarcation between war and terrorism? Because when you start talking about states, people think, well, that's surely, you know, war, not a terrorist organisation. And it's important that we have a, I think, a fairly clear line of demarcation. I think there will always be a degree of ambiguity, but I think that there is currently a bit of confusion and I think we could do with squeezing it out as much as possible. I think certainly in the insurance industry, which I come from, there's often been a presumption that there are states involved, then it must be must be war, and therefore it's largely excluded by the insurance industry. But I think that I mean, if you go back to the early 90s and the IRA, well the IRA were in receipt of Libyan state support. So you could argue well, there was a state involved in the IRA attacks and therefore does that make it war, we'd say, well, that's a nonsense. I mean, the IRA was a terrorist organisation. And the reason that Pool Re was established as a terrorism reinsurance company. OK. But how many states need to be involved and what degree of state involvement needs to be involved before it becomes war and not terrorism? And striking a balance will be will be tricky, but I think it's important. I mean I think just from the insurance point of view, from a reputational standpoint, it's quite important that we’re not there, following a big event saying, well, I'm terribly sorry, but actually we don't cover that because it's not actually terrorism, it's actually technically war. You know, it's that kind of it's the wrong kind of snow argument, which doesn't go down well with policyholders who suffered losses that want claims paid. So I think we need to try and avoid that situation from coming to pass by having kind of ex ante kind of upfront clarity on policy wordings and definitions as hard as that might be. And I've occasionally cautioned people who want to try and narrow the definition of terrorism by saying, well, look, if states are involved, it's got to be an act of war, not one of terrorism. Because I think if you narrow the definition too much, you could actually render Pool Re totally irrelevant, and our scheme obsolete because it's never going to trigger. Because any event that's going to generate any sort of meaningful loss is almost certainly going to have some form of state involved in it in some capacity, whether it's some kind, indirect influence or control or some funding that's been provided, or some hardware that's been provided somewhere along the line. And my view if it's really kind of inconsequential and fairly tangential and indirect, that shouldn't necessarily make it war. Clearly, if there are states who are directly involved, and you know Iranian missiles are coming over, then that's pretty clear what it is. But I don’t think we should be too quick to jump to jump to a conclusion this has to be war because there is some form of state involvement.
Threat Analyst: Oliver Hair
Absolutely. And it's a conclusion we come to a lot at the end of these episodes that it's a constantly moving and evolving threat landscape. Actors, sometimes with increasing capability, but also actors with increasingly diffuse reasons for doing what they're doing. So all we at Pool Re we can do is hopefully keep as abreast to this as possible and keep informing members and audiences of our thoughts and our assessments. But Tom, I'd like to thank you for coming on today. That's been absolutely fantastic and we've really whistled through quite a lot there, I think from your background to the background of Pool Re and now how Pool Re changes alongside this threat, every day, so thanks very much.
Guest Expert: Tom Clementi
Well, it's a pleasure. And look, I mean, I hope if there are people listening to this who are really interested in terrorism and want to engage with Pool Re, you know, we're keen to engage with you because, as I say, our purpose is to provide confidence and resilience to the UK economy in the face of terrorism and anyone that shares that purpose and does things that are aligned with that purpose, then we're keen to work with and partner with. And the great thing about Pool Re, which I don't think I said earlier, and the reason I love this job, is just that the sheer range of stakeholders that one engages with is enormous, because as an organisation, we are a public private partnership, as I've said, and so we've got one foot in the insurance industry, which I also really love. It's a great industry, not always loved by everyone, but I love it. So we engage a lot with insurers and reinsurers and reinsurance brokers, you know regulators and so forth in the financial services world. But we also have one foot in the world of public policy and are dealing with you know, some of the agencies, government departments, think tanks, academia and so forth. So yeah, it's a really, really interesting job. And yeah, let's keep partnering. Let's keep working away and make sure that actually, you know, the UK economy never has to deal with the awful consequences of a large terrorism attack, which none of us want.
Threat Analyst: Oliver Hair
Absolutely. Thanks very much, Tom. Thanks for coming on.
Guest Expert: Tom Clementi
Thanks, Ollie. Pleasure.
Threat Analyst: Oliver Hair
Thank you for listening to the latest episode of Totally Terrorism, a Pool Re podcast. We hope that you have found this discussion useful for supporting or building your knowledge and understanding of terrorism threat. We hope that you'll join us next month for another conversation between a new guest expert and one of the Pool Re terrorism threat analysts.
Senior Threat Analyst: Becca Stewart
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Threat Analyst: Oliver Hair
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