The 2018 Counter-Terrorism and Border Security Bill received Royal Assent today. The passing of the bill into law means that Pool Re will be able to cover non-damage business interruption in the wake of a terrorist attack. Before the law was changed, Pool Re could only reinsure losses incurred if a company’s premises had been physically damaged by terrorists.

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.

“Today’s amendment changes that,” said Pool Re’s Chief Executive, Julian Enoizi. “We have worked very closely with the government, and with the industry since it opted to mutualise the non-damage risk in 2017. Perhaps more importantly, we are already collaborating with business federations, local authorities, brokers and our member insurers, all of [which] need to have open conversations with their customers about just how much may depend on having this cover if the worst should happen.

“Our 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,” said Enoizi. “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.”

Economic secretary to the Treasury, John Glen MP, added: “We will not allow terrorists to change our way of life. So when businesses raised their concerns about a gap in insurance cover following a terror attack, we worked with Pool Re to come up with a solution. Today, we’ve changed the law to give businesses peace of mind, helping them to insure themselves against financial loss as a result of a terrorist attack, even if there is no physical damage to their property. This means businesses will be able take out new and comprehensive policies to protect them in the future.”

The amendment makes the UK’s terrorism reinsurance pool the first in the world to extend its cover to include non-damage business interruption losses.

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