Brokers will hold talks with Pool Re on Monday to try and stop its plans to pass Independent Insurance's terrorist reinsurance premiums to the company's liquidators, Pricewaterhousecoopers.
The British Insurance Brokers' Association (Biba) and four major brokers will raise the issue at its annual meeting with Pool Re chief executive Steve Atkins, after last week's bombing in Ealing highlighted certain claims issues.
“The position Pool Re has taken is that it is not a direct insurer of any of Independent's policyholders, but is one of Independent's reinsurers,” said Biba chairman Mike Williams.
Williams admitted that under Pool Re's remit, as the insurer of last resort on claims involving terrorist attacks, the company was technically correct, because it offered reinsurance on Independent's terrorism policies.
“However, because Pool Re will pay any losses above £100,000 per case,
Independent would have paid reinsurance premiums for that cover. It so happened that Independent collected those premiums from its policyholders,” Williams said.
Policyholders did not have agreements directly with Pool Re, but Williams said brokers believed the situation was “unfair and unjust”, as policyholders were going to miss out on these premiums because of the way the cover was initially arranged.
Williams said: “Brokers believe the premiums should be passed on to the policyholders because they are held with a solvent company, Pool Re, not one that has been liquidated.
“If it wished, it could refund the policyholders directly, rather than the liquidator.”
However, there are contractual and legal constraints under the existing reinsurance which may take time to resolve.
“We just want to explore the options and find out if Pool Re has the opportunity or ability to think about using these premiums in a different way,” said Williams.
Atkins said he was unaware of Biba members' anxiety over the premiums. “I have been in touch with the liquidators and have had a number of meaningful discussions, but no decision has been made,” he told Insurance Times.