Risk management
& mitigation

Driving change in our industry

Risk management and mitigation is a core function of catastrophe reinsurers, although the shape and method of deployment differs.
As a reinsurer of extreme catastrophe risk, Pool Re should engage in risk management provided such engagement is consistent with its mission and objectives. The broad principle now guiding Pool Re is that there is significant value in deploying resources to help key stakeholders understand and mitigate terrorism risk.
Since 2015, Pool Re has collaborated more actively with its public sector partners. This has included:
  1. Proactively addressing terrorism protection gaps (cyber and non-damage business interruption - NDBI) and working closely with Her Majesty’s Treasury, its guarantor.
  2. Investing in and developing expertise through the creation of the Terrorism Research & Analysis Centre (TRAC) in January 2016. TRAC issues regular reports analysing the contemporary threat landscape, hosted cross-sector networking and awareness events, and works closely with academic partners.
  3. Successfully developing the Loss Mitigation Credit and the online Vulnerability Self-Assessment Tool (VSAT) mitigation initiatives and piloting other cross-sector risk management initiatives (detailed below).
Ed Butler's profile picture
Ed Butler CBE DSO
Head of Risk Analysis
Pool RE

Pool Re – the Terrorism Certification Process and Claims

With unlimited capacity through the aid of UK Government funding, the Reinsurance (Acts of Terrorism) Act 1993 allows Pool Re to provide reinsurance funding to the insurance industry and their policyholders.
Reinsurance cover is provided for commercial property and business interruption lines of insurance business, and includes chemical, biological, radiological and nuclear (CBRN) as well as remote digital interference (cyber).
An 'Act of Terrorism' is defined as “persons acting on behalf of, or in connection with, any organisation which carries out activities directed towards the overthrowing or influencing, by force or violence, of Her Majesty’s Government in the United Kingdom”.
HMT has Certified 16 'Acts of Terrorism' within Pool Re’s 25-year existence, including the Westminster, Manchester and London Bridge attacks in 2017. Since its creation, Pool Re has paid over £600m in reinsurance claims to the UK insurance industry.
Quote style

The Certification of an ‘Act of Terrorism’

The certification of an Act of Terrorism graphic
HMT has Certified 16 'Acts of Terrorism' within Pool Re’s 25-year existence, including the Westminster, Manchester and London Bridge attacks in 2017. Since its creation, Pool Re has paid over £600m in reinsurance claims to the UK insurance industry.

Closing the Protection Gap: Main Initiatives

Cyber Terrorism Cover
2018 has proved to be a landmark year for Pool Re. Firstly, with effect from 1 April 2018, Pool Re extended its cover to include an Act of Terrorism, which utilises a cyber trigger to cause physical damage to property. We have also deepened our knowledge of the threat posed by terrorists using the cyber domain and have undertaken further modelling work with the Centre of Risk Studies at Judge Business School, as well as holding multi-disciplinary workshops with public and private sector colleagues. Conrad Prince CB, Former Director General for Operations and Deputy Head of GCHQ, has joined as our Senior Cyber Terrorism Advisor. He brings a wealth of experience of cyber, government and business.
Non-Damage Business Interruption (NDBI)
Since the June 2017 Borough Market attack illustrated the terrorism insurance gap, Pool Re has been working with its Members, Government and other key scheme stakeholders to find a solution. Pool Re’s remit is defined by statute and restricted to loss from Acts of Terrorism that result in damage to commercial property.
Given recent attacks, both in the UK and Europe, have shown that terrorists are capable of causing interruption to business without causing damage to property, it was vital this gap was closed, and businesses were able to buy cover that was relevant to today’s terrorist threat.
To facilitate this, the Reinsurance (Acts of Terrorism) Act 1993 required amendment and Government incorporated a clause within the Counter-Terrorism and Border Security Bill that would extend Pool Re’s remit to non-damage business interruption caused by terrorists. This Act is making good progress through the parliamentary process and we are hopeful we will be able to provide wider cover from January 2019. This cover will respond to that result in access to premises being denied and/or a reduced attraction to customers, providing such coverage is provided in the underlying general business interruption policy.
This is an important change for Pool Re and we are currently working on developing our proposition, building a rating model and creating material to help Members improve penetration of terrorism coverage.
Steve Coates' profile picture
Steve Coates
Chief Underwriting Officer
Pool RE
Information Sharing and Knowledge
Pool Re, through TRAC reporting and other channels, continues to improve the understanding and knowledge of its Members, private sector and other stakeholders. Our current and future focus is very much on providing quantitative data and analysis for modelling purposes so that this peril can be better priced, allowing our Members to increase their own capacity and resource to provide broader and deeper cover for the insured.
Through our work with ARL Partners, we have developed the Vulnerability Self-Assessment Tool (VSAT). This tool builds on the work undertaken with NACTSO in recognising those clients who fell within their Crowded Places initiative, but which could not extend beyond the core 50 companies. VSAT can be used by any Pool Re Member policyholder with assets greater than £50m and is available via the Pool Re website.
Risk Engineer training
In collaboration with ARL Partners and Cranfield University, Pool Re is developing a terrorism risk management training course that will be made available to its Members. As the training develops, we will explore with Cranfield how we might create a form of Pool Re accreditation for terrorism risk engineers.
International collaboration
Pool Re continues to support international collaboration between all the terrorism global pools through the International Forum of Terrorism Risk (Re)Insurance Pools (IFTRIP). The fourth annual conference was held in Russia, hosted by the Russian Antiterrorism Insurance Pool (RATIP) during October 2018. IFTRIP continues to promote initiatives for closer international collaboration and to share expertise and experience to combat the threat of potential major economic loss resulting from terrorism. All the IFTRIP conferences to date have demonstrated the continuing need to share knowledge, experience and lessons learnt from the threat and consequences of global terrorism.
The broad principle now guiding Pool Re is that there is significant value in deploying resources to help key stakeholders understand and mitigate terrorism risk.
Quote style

Links to sources of further information

Action Counters Terrorism (ACT)
Knowing how to recognise and report suspicious activity is important in keeping safe from terrorism.
Find out more
Centre for the Protection of National Infrastructure (CPNI)
Their website offers a wide range of advice, not just for national infrastructure assets.
Find out more
Cross-sector Safety and Security Communications
A partnership between law enforcement agencies, local and national government organisations and private sector businesses.
Find out more
The UK threat levels are set by MI5 and the Joint Terrorism Analysis Centre, JTAC.
Read more about them and international terrorism via the MI5 website.
Find out more
UK Protect
Run by the Metropolitan Police, UK Protect publishes monthly newsletters to provide regular updates advising and informing businesses in the UK of relevant protective security information. Follow their Twitter.
Find out more
See It, Say It, Sorted
A campaign to encourage train passengers and station visitors to report any unusual items or activity. Text 61016 or call 0800 40 50 40 to help keep the UK’s rail network safe.
Find out more
Run, Hide, Tell
Information and resources to stay safe if you are caught up in a firearms and weapons incident in the UK.
Find out more
National Cyber Security Centre (NCSC)
A part of GCHQ, the NCSC vision is to help make the UK the safest place to live and do business online.
Find out more