Pool Re has launched a new scheme to encourage insurers to include terrorism cover as standard in SME property insurance policies across Great Britain.
Effective in April, it gives Pool Re members discounts on their reinsurance costs if they bring back terrorism cover across some or all of their SME commercial property policies. To qualify, the cover must be included as standard and cannot be removed.
The aim is to increase terrorism insurance coverage among small and medium-sized enterprises. SMEs make up 99% of the UK business community, but only 4% have dedicated terrorism insurance, according to a survey by the Federation of Small Businesses.
The gap goes back to the 1992 IRA attack on the Baltic Exchange. After that, terrorism exclusions became standard in UK commercial property insurance, which meant SMEs usually had to buy the cover separately instead of getting it as part of a standard policy.
Pool Re said the scheme is voluntary for members, but is meant to make terrorism cover more widely available in a market where many smaller businesses may already think they are covered under standard property insurance.
“Enhancing terrorism protection for SMEs is not only about closing an insurance coverage gap, it is about strengthening national economic resilience in a world where the terrorism risk landscape continues to evolve. This scheme gives our members an additional incentive to offer terrorism cover as standard, as was the case prior to the formation of Pool Re in 1993. With no material financial burden placed on SMEs, we hope the scheme will lead to a significant uptick in coverage across the economy,” Pool Re CEO Tom Clementi said.
Pool Re said the scheme was developed with its members and HM Treasury. It follows changes made last year to its treaty framework, which moved from pricing individual risks to reinsuring members’ full portfolios for one annual price.
“Pool Re plays an important role in supporting the UK’s economic resilience, and this incentive scheme delivers real market change for the UK’s SMEs. The Government stands ready to support efforts to strengthen the resilience of UK businesses, and we encourage Pool Re’s Members to make the most of this excellent opportunity to expand their SME coverage offering - it’s good news for Pool Re, its Members and the UK’s business community,” said Lucy Rigby KC MP, Economic Secretary to the Treasury.
