Organisations can now insure losses incurred if a business cannot trade or is prevented from accessing its premises in the wake of a terrorist attack.
Airmic has long-supported this extension of cover. Julia Graham, Airmic's technical director and deputy CEO, said it will be of significant value to risk managers. "This is a really important development for the resilience of all businesses across the UK. It brings Pool Re's cover into line with the economic realities of modern-day terrorism risk. Loss of profit can be at least as crippling as physical damage, and we welcome the work done by Pool Re to get this through parliament."
The gap in insurance coverage was highlighted in the 2017 attacks on Manchester and London Bridge, where small and medium-sized businesses were shown to be particularly vulnerable with several caught behind police cordons or experiencing a reduction in footfall following the events.
They suffered significant, and in some cases crippling, business interruption losses for which they could not be compensated, either because they had not purchased terrorism insurance, or because the cover excluded business interruption if their premises had not been damaged.
Pool Re said that the passing of the Bill marks a "crucial development" in UK financial resilience to the evolving patterns and methodologies of terrorism. Chief executive, Julian Enoizi, said their priority has been to keep this "as far as possible a private market solution and so it will be reinsured by us via a new programme."
He added: "As we continue to identify and understand the protection gaps which emerge and bridge them through this unique public-private solution, we are focussing on helping the industry to grow by ensuring it becomes more comfortable with the exposure and thus reclaims more and more terrorism risk as we have seen recently with growing retentions and being able to cease contingency cover altogether."
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.
Pool Re are confirmed speakers at our Geopolitics Day in April, you can read more about this event and register here.
Read Pool Re's press release on the extension here.