Pool Re hails ‘landmark’ government move to extend terror coverage to non-damage BI

Pool Re has welcomed a move this week by the UK Government to begin law changes that would allow the pool to extend terrorism cover to non-damage business interruption (NDBI) losses. Meanwhile, commercial property MGA European Property Underwriting Ltd (EPUL) has launched terrorism insurance for UK businesses as an alternative to protection provided by Pool Re that includes cover in Europe. The first reading of a parliamentary bill took place after lobbying from Pool Re to update a law to allow it to cover NDBI terror risk. Pool Re described it as a “landmark” move. Pool Re announced in March that it is seeking changes to the 1993 Reinsurance (Acts of Terrorism) Act that would enable it to cover NDBI losses resulting from acts of terrorism. The pool is currently in discussion with the UK Treasury to offer NDBI, and hopes to firm up plans later this year. Steve Coates, chief underwriting officer of Pool Re, told Commercial Risk Europe that the reinsurer is already working on its NDBI offering in advance of the required legislative change. “We are working to be ready for when the government passes the required legislation, which we hope will be within the year. We would like to make NDBI terrorism cover available as soon as the government gives the go-ahead,” said Mr Coates. Pool Re was therefore delighted this week to hear that the legislative process is underway. CEO of Pool Re Julian Enoizi said: “Pool Re has long campaigned for a solution which removes the need for business premises to have been damaged before terrorism insurance can pay.” Mr Enoizi added that the change in law would be a world first. “The announcement is a watershed moment which, if the bill is passed, will make the UK home to the first terrorism insurance pool in the world to extend its cover to include business losses arising from non-damage business interruption.” The change in law will be housed in an amendment to the 1993 Reinsurance (Acts of Terrorism) Act that currently restricts insurers to only pay claims if commercial property has been damaged during a terrorist attack. Businesses that are affected or cordoned off by police investigations can incur significant financial loss through interruptions to normal business operations. Businesses within the police cordon in the London Bridge terror attack last year, including traders at Borough Market, were closed for almost two weeks. The NDBI terror cover is likely to be optional for Pool Re members and work as an extension to property insurance. The updated remit for Pool Re follows other initiatives to extend cover to cyberterrorism, which took effect in April. Airmic is supportive of the recent changes to Pool Re’s offering, according to John Ludlow, the UK insurance and risk management association’s chief executive. “Pool Re offers a valuable capability and we are encouraged by the direction of travel. We welcome the extension of Pool Re cover to cyberterrorism and plans to offer non-damage business interruption,” he said. In other news this week, EPUL moved to offer buyers an alternative to Pool Re. Its standalone terrorism policy covers businesses in the UK and Northern Ireland for material damage and business interruption cover. Terrorism cover will also be available in Europe. Under EPUL’s offering, insureds can select which properties they wish to cover, something not possible under Pool Re. Policy loss limits are also available in return for a rating discount. Cover includes day-one inflation provisions and alternative residential accommodation free of charge. EPU has an exclusive capacity deal with HDI Global, as well as support from Swiss Re and Liberty Mutual. Its move into terrorism cover follows last September’s decision to become a Lloyd’s coverholder. EPUL said its terrorism cover is a “cost-effective alternative” to Pool Re, with premiums starting at £25 compared to £100 at Pool Re.