Pool Re, the UK’s largest terrorism reinsurer, has launched a new incentive scheme for its members, which comes into effect on April 1, offering discounts on reinsurance costs when members bring terrorism cover back as standard on their SME property policies.
“Members can elect to reinstate coverage on some or all of their commercial real estate portfolio in exchange for reduced pricing on elements of their reinsurance portfolio held with Pool Re,” the company explained.
Pool Re said the scheme was designed in consultation with members and HM Treasury following last year’s modernization of its treaty framework, which moved from risk-based pricing to reinsurance of members’ entire portfolios at a single annual price.
Pool Re added: “SMEs make up 99% of the UK business community and represent a unique vulnerability in the UK’s economic resilience, with only 4% of SMEs having dedicated terrorism insurance products (according to a survey by the Federation of Small Businesses).”
Providing further background, the company noted that terrorism exclusions became standard on UK commercial property insurance policies following the 1992 IRA attack on the Baltic Exchange.
As a result, SMEs generally do not have access to terrorism cover unless they actively choose to buy back. Pool Re therefore urges its members to take advantage of this opportunity to make SME terrorism insurance the norm, especially as many SMEs already believe that terrorism insurance is included in their standard property insurance policies.
Pool Re observed: “Member participation in the scheme is entirely voluntary, but to qualify, terrorism cover must be embedded as standard in the product and cannot be removed from the policy, helping to ensure meaningful protection for small businesses.”
Tom Clementi, CEO of Pool Re, commented: “Strengthening terrorism protection for SMEs is not only about closing the gap in insurance coverage, but also about increasing the resilience of national economies in a world where the terrorism risk landscape continues to evolve.
The scheme provides our members with an additional incentive to offer terrorism cover as standard, as was the case before Pool Re was founded in 1993. With no substantial financial burden on SMEs, we hope the scheme will lead to a significant increase in insurance coverage across the economy.
Lucy Rigby KC MP, Economic Secretary to the Treasury, said: “Pool Re plays an important role in supporting the resilience of the UK economy and this incentive scheme delivers real market change for UK SMEs.
“The government stands ready to support efforts to strengthen the resilience of UK businesses and we encourage Pool Re’s members to take advantage of this fantastic opportunity to expand their small business insurance cover – this is great news for Pool Re, its members and the UK business community.”
