The bill will allow Pool Re to provide business interruption cover for firms that suffer losses due to terrorism 

Both Biba and the ABI have welcomed the Royal Assent of the terrorism bill which will allow Pool Re to cover non-damage business interruption.

The amendment makes the UK’s terrorism reinsurance pool the “first in the world” to extend its cover to include this.

Pool Re’s chief underwriting officer, Steve Coates, said that the amendment marks a real “turning point” for the industry’s ability to deliver comprehensive protection.

And John Glen MP, economic secretary to the treasury added that the passing of the bill marks a “crucial development in UK financial resilience” to the evolving patterns and methodologies of terrorism.

The new Act will allow Pool Re to provide insurance cover for businesses that suffer losses as a result of acts of terrorism even though their own premises have not been physically damaged for the first time.

It will bring the Counter-Terrorism and Border Security Act 2018 into UK law.

The news follows Pool Re announcing last month that it will no longer reinsure members for contingency cover to their insureds.

What does this mean?

It will allow Pool Re to cover losses incurred if a business cannot trade or is prevented from accessing its premises following a terrorist attack.

Previously Pool Re could only reinsure losses incurred if a company’s premises had been physically damaged.

Glen added: “This means businesses will be able take out new and comprehensive policies to protect them in the future.”

This gap in insurance was made light of in 2017 when the Manchester and London Bridge attacks occurred.

SMEs were particularly vulnerable with several caught behind police cordons or experiencing a reduction in footfall.

Many suffered significant business interruption losses for which they could not be compensated.

This was because they had not purchased terrorism insurance, or the cover excluded business interruption if their premises had not been damaged.

Pool Re was set up in 1993 to protect businesses and the insurance industry from the impact of the IRA’s mainland bombing campaign, which targeted high-value infrastructure and prioritised economic disruption.

Pool Re’s chief executive, Julian Enoizi, said it has worked very closely with the government, and the industry since it opted to mutualise the non-damage risk in 2017.

“Perhaps more importantly, we are already collaborating with business federations, local authorities, brokers and our member insurers, all of whom need to have open conversations with their customers about just how much may depend on having this cover if the worst should happen.”

Evolving terrorist threats

James Dalton, director of general insurance policy at the ABI agreed it was a “sensible step in response to the changing nature of terrorism” and a good example of insurers and Government working together.

“This measure should help ensure businesses can more easily access cover to support them through the disruption which can be caused by a terror attack,” he added.

Glen continued: “We will not allow terrorists to change our way of life.”

He said that when businesses raised their concerns about a gap in insurance cover following a terror attack, the government worked with Pool Re to come up with a solution.

“However, today’s terrorist threat to the UK is very different, with attacks here and across Europe since 2014 being more frequent and often less sophisticated. Although terrorists have targeted people indiscriminately, attacks have not necessarily resulted in physical damage to premises. This created a problem, given most terrorism schemes around the world were set up to primarily deal with damage to property,” he added.

Coates, said: “It’s the sad reality that business-owners across the country now have a new set of perils that threaten their livelihoods.”

Need for reform

Graeme Trudgill, Biba executive director, explained that the changing nature of the risk terrorism over recent years highlighted the “need for reform” regarding terrorism cover for business interruption insurance.

He said: “This legislation is something Biba has campaigned for with the support of our members, Pool Re itself and Members of Parliament including Neil Coyle MP whose constituency includes Borough Market which was badly affected by an attack in 2017.

“The changing nature of terrorism is leaving businesses exposed. This new Act is good news for all businesses. We also recognise the need to encourage more small businesses to buy any kind of terrorism cover as fewer than 3% of SMEs take up any cover at all and we will in conjunction with Pool Re be delivering a guide to help businesses understand their risks and helping brokers to access insurance for their clients.”


Paul Higham, property account manager, at Allianz said: “This announcement is welcome news and a sensible and reassuring solution which will bring certainty for the industry and its customers.”

Rob Smart, technical director at Mactavish, said that the ammendment was “very positive” as many more businesses can be affected by terrorism than physical damage as a result.

He added: ”Obviously it is up to primary insurers to clearly offer this cover before policyholders themselves will see the benefit.

”Terrorism cover is a notoriously tricky area of insurance where policyholders should check carefully what cover they have – for example, standard terrorism policy exclusions may in fact exclude more than the equivalent terrorism policy extensions leaving a gap where insurance does not provide protection.”


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