Government-backed terrorism reinsurer to consider feedback from risk managers in overhaul

The UK’s government-backed terrorism reinsurer Pool Re is undergoing a strategic review as it tries to stay relevant to members and insurance buyers.

Pool Re, which was founded in 1993 to plug the gap in available terrorism cover after a series of attacks in London in the early 1990s, is considering a number of changes in response to feedback from UK risk managers through their trade body Airmic.

These include charging lower premiums in return for risk mitigation measures or higher retentions.

Pool Re chief executive Julian Enoizi told risk managers at last week’s annual Airmic conference: “One of the things I talk to [Airmic chief executive] John [Hurrell] a lot about is how we listen to you, the customer.

“John has made some very good points: We don’t give credit right now if you take bigger deductibles on your policy. We don’t differentiate between 10 £1m buildings and one £10m building. And we don’t give loss mitigation credit if you are taking steps to reduce your exposure.

“We are going through a very big strategic review of Pool Re right now. That strategic review is going to the board of directors and a lot of the Airmic feedback has been incorporated into our strategic review, as well as other feedback and discussions we have had [with other terrorism insurance schemes] around the world.”

Biggest challenge

Pool Re executives were unable to say when the review would be complete, pointing to some of the complexities that needed to be considered.

Pool Re chief underwriting officer Steve Coates said: “It is an ongoing process. We are looking at what changes are prudent and sensible, and will then need to go through a process of governance with our board and the government.

“That process is underway but the timeframe is to be announced.”

One particular challenge for the reinsurer is making sure that any changes satisfy all interested parties. These include the UK Treasury, which provides Pool Re’s capital backing, its 220 UK insurer members, which it reinsures, and the risk managers and insurance buyers, who ultimately pay for the terrorism cover that Pool Re enables its member insurers to provide.

Enoizi said that the interests of these groups have diverged over time, and described pleasing everyone with the new changes as “my biggest challenge”.

He said: “We have got to make sure that the interests of all stakeholders are considered and try and bring them back into alignment.”