Pool Re, a mutual terrorism reinsurance firm backed by the UK government, has purchased a new retrocession worth £40m to safeguard operations against non-damage business interruption (NDBI) resulting from terror attacks.
The cover was placed by Guy Carpenter, while insurer Liberty Specialty Markets took the lead market role on the placement. Munich Re and AXA XL also participated in the placement.
The new NDBI retro cover protects the reinsurer with a limit of £40m and sits excess of both a £15m placement attachment and separately, the Member insurer retentions.
The Counter-Terrorism and Border Security Bill 2018 was signed in February 2019. The rule enables Pool Re to cover losses incurred if a business cannot trade or is prevented from accessing its premises after a terrorist attack that does not involve damage.
Prior to this regulation, Pool Re was able to only reinsure losses sustained if a company’s premises are physically damaged in a terrorist attack.
Pool Re said that the placement was made possible by the development of in-house NDBI modelling capability that returns the majority of NDBI risk to the private market. It supports Pool Re’s strategy to normalise the market to the maximum, sustainable extent possible.
Pool Re chief underwriting officer Steve Coates said: “This is the culmination of our longstanding efforts to both enable Pool Re to cover non-damage business interruption and to return as much of the risk to the private market as possible.
“Our actuarial team, in collaboration with Guy Carpenter and counter-terrorism specialists, developed an in-house model for NDBI, which allows both us and our reinsurers, to quantify and evaluate the risk.”