Airmic welcomes Pool Re business interruption extension
Airmic has strongly welcomed the Treasury decision to allow Pool Re to extend its cover to include non-damage business interruption losses resulting from acts of terrorism.
The government-backed reinsurer is currently restricted by the 1993 Act only to pay out if physical damage has occurred to commercial property. This means, for example, that businesses inside a police cordon that suffer financial loss through being unable to access their property or to trade are only covered if there has been physical damage during a terrorist attack. The government has now, however, agreed to amend the 1993 Reinsurance (Acts of Terrorism) Act to enable it to broaden its cover.
Deputy Airmic CEO Julia Graham said: "The decision to allow Pool Re to cover Business Interruption will be warmly welcomed by industries in the UK and is a development that Airmic has always supported. It is a logical and much needed step, especially with the rapid changes in business models that are taking place. The potential cost to supply chains of future terrorist attacks is now every bit as great as the physical loss of buildings. The ability to transfer the BI element of terrorism risk to Pool Re will be a real benefit to risk managers."
"This amendment will close the terrorism insurance gap for businesses up and down the country, which, combined with our efforts to make cover more affordable for SMEs and regional businesses across Great Britain, will increase the resilience of the economy," said Pool Re chief executive Julian Enoizi. "Businesses can be confident they will be covered in the event of a terrorist attack, and able to get back on their feet quickly for the benefit of their community, customers and suppliers."
Although companies cannot buy cover from Pool Re, unless they use their captives to do so, the vast majority of Airmic members are protected indirectly by Pool Re through their primary insurers. Airmic played a leading role in its establishment in 1993 following a spate of terrorist attacks in London and elsewhere.
In addition to the BI extension, from April 2018 Pool Re will extend its cover to include material damage and direct business interruption caused by acts of terrorism using a cyber trigger.