Pool Re, the UK’s government-backed terrorism reinsurer, has initiated a market consultation to assess the feasibility of making terrorism insurance a standard feature within commercial property policies for small and medium-sized enterprises (SMEs).
The consultation, running until the end of April, seeks input from Pool Re’s members, re/insurance intermediaries, policyholders, industry bodies, and the broader insurance market. It aims to address the low uptake of terrorism coverage among SMEs and evaluate potential impacts on economic resilience.
As part of this effort, Pool Re will introduce a modernized reinsurance scheme on April 1, which is designed to simplify and lower the cost of incorporating terrorism coverage into SME property policies. The proposed approach would return the market to conditions before 1993, when terrorism coverage was included as a standard feature in commercial property insurance.
The market consultation follows Pool Re completing the placement of its expanded retrocession program, securing £2.75 billion of aggregate excess of loss cover with participation from more than 60 international reinsurers.
The program, which was brokered by Guy Carpenter, represents an increase from the previous £2.4 billion limit. Hannover Re and The Fidelis Partnership were among the firms providing pricing guidance.
Tom Clementi (pictured above), CEO of Pool Re, said that only 4% of SMEs in the UK currently hold terrorism insurance, while many more may believe they have coverage.
He said that the objective is to reduce both the protection and expectation gaps by offering Pool Re members a more competitive pricing structure for their SME portfolios.
The consultation will gather market feedback on the most effective way to implement this change. Clementi encouraged broad participation, stating that input from stakeholders will be essential to ensuring that any new approach is practical and beneficial for all involved.
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