Airmic says Pool Re changes good for buyers

On Friday members voted in favour of changes to Pool Re that include a reported rise in the fee charged by the UK government in return for its guarantee to pay claims should Pool Re's own funds be exhausted by a major terrorist attack. Its members also voted in favour of further changes that Airmic says will benefit buyers. The association believes the reforms to Pool Re will make it more attractive to business as well as diversifying its risk base. While the exact details have still to be determined, Pool Re has said it will evolve to a system that better reflects the risks inherent in individual businesses. This will include recognition of good risk management, a willingness to accept higher deductibles and greater reflection of differences in exposure to terrorist threats. There will be streamlined access to Pool Re for small businesses.hide"We wholeheartedly welcome Pool Re's new approach," said Airmic's chief executive John Hurrell. "It's a big step forward into the 21st century. It will make the scheme an even more valued protection against the threat of terrorism to UK businesses and also to many public-sector organisations. These are the sort of changes that Airmic members, who are among the biggest end-users of Pool Re, have been urging for several years. Pool Re's management are to be congratulated on staying with them despite the very difficult pressures they face in terms of increased payments to the UK Treasury." Set up in 1992, Pool Re is a mutual reinsurer backed by the UK government to protect commercial property in Great Britain. Its members include the vast majority of property insurers active in the UK market. Following the approved changes AM Best said this week that insurers are likely to continue to participate in Pool Re despite the apparent increase in the levy charged by the UK government. "AM Best expects the UK insurance sector to remain reliant on the backstop guarantee provided by the UK government for terrorism cover, given the magnitude of losses that could result from such an event," said Catherine Thomas, Director of Analytics at the rating agency. "In particular, losses resulting from nuclear, biological, chemical and radiological (NBCR) attacks could be very high and are extremely difficult to estimate," she added. Despite its assertion that Pool Re will continue to dominate the UK terrorism risk transfer space, AM Best noted that terrorism insurance is still available globally in the open market, and that rates have been under pressure. It said that underwriting expertise for terrorist events has improved significantly in recent years, to an extent that terrorist risk can be underwritten in the open market. Furthermore, modelling has improved, with the three major catastrophe modelling companies all offering terrorism models, said AM Best. This week Bowring Marsh, the dedicated specialist international placement broker for Marsh, launched a UK terrorism insurance facility to offer insurance buyers an alternative or back up to Pool Re. Marsh says the new facility can also complement the offering of Pool Re and be tailored to individual company needs. (See related story)

Airmic says Pool Re changes good for buyers

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