On 22 March 2018, the Economic Secretary to the Treasury, announced that the British Government intends to amend the Reinsurance (Acts of Terrorism) Act 1993 to extend the cover available to insureds through the government backed reinsurer Pool Re, to include business interruption losses that are not contingent on damage to commercial property.
Pool Re is a government-backed reinsurance scheme which was established in 1993 in response to the Provisional IRA’s bombing campaign on UK territory. It is intended to underwrite commercial property against terrorism risk, and has been adapted at various times in response to changing circumstances in the insurance market. A notable change has been the extension of cover to include damage resulting from acts of terrorism using a cyber trigger, as we have previously reported , which will take effect from April 2018.
The proposed extension of the scheme will allow Pool Re to pay out in cases where a business has suffered financial loss, but no actual damage to physical property, for example, where commercial premises becomes inaccessible due to emergency service operations. This step recognises the changing nature of terrorism threats in recent years. Attacks such as those in Westminster and London Bridge caused minimal property damage, but caused substantial disruption to business in the surrounding areas. The availability of such extended business interruption cover should increase the resilience of businesses in the wake of such attacks. We shall continue to update readers on developments as they arise.