Out-Law News | 09 Jan 2019 | 4:33 pm | 1 min. read
The reinsurer began offering so-called contingency cover soon after London was awarded the 2012 Olympic Games, as the necessary cover was unavailable on the commercial market. It will withdraw its offering from the end of March 2019, after commercial contingency insurers indicated that they were now able to retain this type of risk.
Chief executive Julian Enoizi explained that the purpose of Pool Re is "to provide reinsurance cover against terrorism losses where the commercial market is unable to do so in sufficient quantity to meet demand".
"As the commercial markets develop greater appetite and capacity, and there is therefore no longer a market failure, it is appropriate for us to withdraw and we are pleased that contingency cover is now available to insureds commercially," he said. "Pool Re will, consistent with its strategy, continue to work with the commercial market to ensure that, wherever possible, cover can be returned to the market."
Pool Re was established in 1993 in response to the IRA's campaign of bombings in England. It is a mutual reinsurer, with members making up the vast majority of the insurers and Lloyd's syndicates that offer commercial property insurance in the UK. Membership of Pool Re provides insurers with a guarantee that they can provide cover for losses resulting from acts certified as terrorism by the UK government, regardless of the scale of the claims.
Traditionally, the guarantee available through Pool Re was limited to covering losses caused by damage to commercial property. Last year, the government legislated to extend coverage to business interruption losses, in response to the changing nature of terrorist attacks. The change means that businesses within a police cordon which are forced to close during an extended investigation period may be entitled to claim for loss suffered.