Pool Re said the changes will maintain the core principles of the scheme while offering members increased underwriting flexibility. Credit: garagestock/Shutterstock.

Pool Re, the UK’s government-backed terrorism reinsurer, has received support from its members and HM Treasury for proposals to modernise its reinsurance arrangements.  

This move is aimed at transforming the current facultative arrangement into an aggregate catastrophe excess of loss treaty by April 2025, ensuring it remains effective in the digital era.  

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The transition is designed to provide a more risk-reflective pricing structure and reduce administrative tasks for members.  

Pool Re said the changes will retain the core principles of the scheme while offering members increased underwriting flexibility for terrorism-related property and business interruption risks. 

The modernisation initiative is part of the Scope of Works programme, which emerged from the government’s last review of Pool Re, concluding in March 2022.  

Members will now only need to submit an annual exposure return, streamlining reporting requirements. 

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The proposed changes will also enable members to tailor their participation in the scheme according to their strategic goals and risk tolerance.  

This flexibility is expected to encourage wider adoption of terrorism insurance, shift risk back to the private sector and enhance the UK economy’s resilience against terrorism.  

The revised scheme’s framework has been shaped over two years through engagement and consultation with members and HM Treasury.  

Pool Re CEO Tom Clementi said: “When Pool Re was founded some 30 years ago, it was never intended to be a permanent, static and definitive solution. Our job was always to correct a market failure, and to provide opportunities for the industry to take more terrorism risk onto its own balance sheet and normalise the market.” 

UK Economic Secretary to the Treasury Bim Afolami said: “Pool Re has worked hard on its plan to modernise its reinsurance offering, and I am pleased that Pool Re’s proposals are supported by its members as well as the government. I look forward to seeing the impact of the change for members, customers and the terrorism insurance market.”