Pool Re: A Government-Guaranteed Insurance Solution

Pool Re is a unique insurance solution that's been around since 1994, providing a government-guaranteed insurance program for the UK's terrorism reinsurance market.

This program is designed to ensure that insurance companies can continue to pay out claims in the event of a terrorist attack, even if they're unable to do so themselves.

Pool Re operates independently, with its own board of directors and management team, but its financial stability is underpinned by a government guarantee.

This guarantee provides a vital safety net for the insurance industry, allowing it to continue providing essential coverage to businesses and individuals across the UK.

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Pool Re was established in response to a series of terrorist incidents in the early 1990s in London and elsewhere in England related to the situation in Northern Ireland.

These incidents caused significant losses, prompting insurers and reinsurers to consider ceasing to provide terrorism cover for commercial properties due to the high potential cost of losses.

The lack of a reliable method for estimating future loss experience made it difficult for insurers and reinsurers to calculate accurate premiums, leading to concerns about substantial losses.

In 1992, it became clear that a new scheme would require joint involvement from the insurance industry and government to address the issue.

Extensive dialogue between the two parties led to the development of the Pool Re scheme, which began operations in 1993.

Since its inception, Pool Re has been involved in claims arising from thirteen separate terrorism incidents, resulting in losses of over £600 million.

The Pool Re scheme has undergone significant changes over the years, particularly after the September 11th attacks in 2001. This led to a widening of cover and the removal of exclusions related to chemical, biological, radiological, or nuclear (CBRN) attacks.

Pool Re's cover is now effectively Material Damage and direct Business Interruption, with Business Interruption flows only from events happening at the policyholder's premises. Intangible assets like Money and Data are not covered, as they are more appropriately covered by the cyber market.

In 2025, Pool Re will modernize its reinsurance scheme to an annual aggregate catastrophe excess of loss treaty, introducing risk-adjusted pricing and simplifying reporting for its members. This change will also offer customized retention levels to manage terrorism risk.

The Pool Re scheme has undergone significant changes over the years to adapt to the evolving insurance market.

In 2002, the scheme was widened to cover all types of terrorism, not just those involving fire or explosion, in response to the 9/11 attacks.

Pool Re's cover is now on an "all risks" basis, eliminating exclusions for chemical, biological, radiological, or nuclear attacks.

However, risks related to war and cyber threats are still excluded until April 2018.

The scheme's cover is limited to material damage and direct business interruption, with no coverage for intangible assets like money and data.

Pool Re has been working to modernize its reinsurance scheme, with a new model set to take effect in April 2025.

This modernization introduces risk-adjusted pricing, simplifies reporting, and offers members customized retention levels to manage terrorism risk.

The new model also ensures that the principles and coverage of the scheme remain, while introducing underwriting flexibility for members.

Pool Re's modernization efforts are part of its Scope of Works program, agreed upon by its members and the HM Treasury in 2022.

The transformation aims to correct a market failure and provide opportunities for the industry to take more terrorism risk onto its own balance sheet.

Pool Re has been working with its members and the government to implement this change, with a focus on normalizing the market.

The new model is expected to have a positive impact on the terrorism insurance market, with Pool Re's CEO emphasizing that it's a good outcome for both members and the taxpayer.

Pool Re has upsized its retrocession program to almost $3.5 billion at the latest renewal. This significant increase in size is a testament to the program's growing importance in covering terrorism risk in the UK.

The Association of Bermuda Insurers and Reinsurers (ABIR) reported that its member companies now supply 32% of terrorism retrocession capacity to Pool Re, which is equivalent to £770 million.

Pool Re's retrocession program is a vital component of its overall terrorism risk management strategy. It allows the company to transfer a portion of its risk to the capital markets, making it more resilient in the face of potential terrorist attacks.

Despite the upsizing of the retrocession program, insurance-linked securities (ILS) capacity remains limited to Pool Re's previous catastrophe bond. This means that the company is still relying on traditional reinsurance markets to provide a significant portion of its retrocession capacity.

The UK government-backed mutual terrorism reinsurer has seen significant interest and appetite from the capital markets for its terror catastrophe bonds, which has helped to increase the size of its retrocession tower.

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Pool Re is a UK-based terrorism reinsurance pool that provides financial support to insurance companies in the event of a terrorist attack.

The pool has a unique structure that allows it to operate efficiently and effectively.

Pool Re's restructure in 2001 was a significant milestone, allowing it to take on more risk and provide better coverage to its members.

This restructure also enabled Pool Re to reduce its costs and improve its financial stability, making it a more attractive option for insurance companies.

Pool Re has a self-contained structure, having absorbed £1.25 billion in relation to 17 terrorist attacks without calling on the government guarantee.

The scheme has been able to absorb these significant losses over nearly 30 years, amassing reserves that could cover future losses.

However, the threat of cyber risks is more imminent, and a catastrophic attack could be particularly challenging for Pool Re to handle.

Pool Re has never had to use the government guarantee, but the potential financial impact of a cyber attack could make an unlimited exposure to this risk more fiscally challenging than terrorism risk has proved to date.

Despite this, Pool Re's reserves have been built up over nearly three decades, giving the scheme a strong foundation to draw upon in the event of a major cyber attack.

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Pool Re has appointed Jonathan Gray as its new Chief Underwriting Officer. He will take over from Steve Coates, who will be retiring in early 2023.

Jonathan Gray will join the government-backed reinsurer in November and will work alongside Steve Coates during the transition period. This will allow for a smooth handover of responsibilities.

The business will focus on ensuring continuity during this time, with Gray learning the ropes from Coates.

Pool Re Partnerships play a vital role in supporting the UK's terrorism reinsurance market.

Pool Re partners with Lloyd's of London to provide terrorism reinsurance to the UK insurance industry.

This partnership allows Pool Re to leverage Lloyd's expertise and risk management capabilities.

Pool Re also works with other key stakeholders, including the UK government and the Association of British Insurers (ABI), to ensure the terrorism reinsurance market remains robust and effective.

The partnership with Lloyd's has enabled Pool Re to provide a comprehensive terrorism reinsurance solution to the UK insurance industry.

Pool Re's partnerships have been instrumental in helping to mitigate the risk of terrorism-related losses in the UK.

Pool Re has successfully issued a £100 million terror catastrophe bond, known as Baltic PCC Limited (Series 2022-1), which received strong investor support.

This bond is a significant increase in size compared to its 2019 placement, indicating a growing appetite for such investments.

Pool Re has also upsized its retrocession tower to £2.5 billion, a notable increase from £2.475 billion the previous year.

The company is actively exploring alternative reinsurance models, including a catastrophe treaty reinsurance model, which is currently under consultation with its members.

Pool Re has been at the forefront of innovative reinsurance solutions, including the issuance of its first terrorism risk catastrophe bond earlier this year.

The company is now seeking a £75 million renewal of its Baltic PCC terror catastrophe bond, a testament to the growing interest in cat bonds for terrorism risk management.

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Pool Re Growth is a significant aspect of the company's success. The number of reinsured pools has increased from 14 in 2008 to 23 in 2020.

This growth is largely due to the increasing demand for terrorism insurance among UK businesses. Pool Re's unique approach to risk pooling has made it an attractive option for companies seeking to mitigate their terrorism-related risks.

As a result, the company's premium income has also increased, rising from £143 million in 2008 to £344 million in 2020. This growth has allowed Pool Re to invest in new technologies and services to support its members.

Pool Re's growth has also led to the creation of new jobs and opportunities within the company. In 2020, the company employed over 200 people, up from around 150 in 2008.

Bermuda re/insurers now back nearly a third of terrorism risk in the UK by supplying retrocession to Pool Re, with their member companies providing 32% of the £770 million terrorism retrocession capacity.

Pool Re is a British government-backed terrorism reinsurer that has been working to modernize its scheme after more than two years of engagement and consultation, with its members and HM Treasury backing its formal proposals to transform the current scheme.

This transformation aims to pave the way for modernizing the Pool Re scheme, although the specific details of the changes are not mentioned in the article.

The Bermuda market has become a significant player in the UK's terrorism risk landscape. Bermuda re/insurers now supply 32% of terrorism retrocession capacity to Pool Re.

This is a notable shift, as Bermuda's involvement in the UK's terrorism risk has increased dramatically. ABIR member companies provide £770 million of terrorism retrocession capacity to the UK's terrorism risk pool.

The Bermuda market's growing influence in the UK's terrorism risk is a testament to its expertise and capacity.

HM Treasury has backed Pool Re's formal proposal to transform the current Pool Re scheme.

Pool Re's members have also supported the proposal, which marks the end of a two-year engagement and consultation process.

The transformation aims to modernize the scheme and pave the way for more efficient risk management.

Pool Re's members will benefit from risk-adjusted pricing, simplified reporting, and customized retention levels to manage terrorism risk.

The new model is expected to take effect in April 2025 and is a key element of the Scope of Works programme agreed by Pool Re's members and HM Treasury.

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Bim Afolami, economic secretary to the Treasury, has expressed support for the proposal, looking forward to seeing its impact on members, customers, and the terrorism insurance market.

Pool Re's transformation is a significant step towards normalizing the market and providing opportunities for the industry to take more terrorism risk onto its own balance sheet.

The UK government is actively working to support Pool Re, a terrorism reinsurance scheme. Pool Re has been in place since its inception.

Pool Re has been in talks with the UK government to expand its coverage to include state-backed cyber attacks. This move aims to address growing concerns over the safety net provided by the private sector.

The UK government has also announced its upcoming Protect Duty legislation, also known as Martyn's Law. This legislation seeks to improve the safety and security of citizens in public premises.

Pool Re has welcomed the UK government's announcement of Martyn's Law, indicating a positive relationship between the two entities.

The UK insurance market is a significant sector, with a total market size of £63.9 billion in 2020.

The UK has a highly competitive insurance market, with a large number of insurers operating in the country.

The UK insurance market is dominated by a few large players, with the top five insurers accounting for over 70% of the market share.

The UK government has implemented various regulations to ensure the stability and security of the insurance market, including the Insurance Act 2015.

The Insurance Act 2015 introduced new rules for insurance contracts, including the requirement for insurers to disclose all relevant information to policyholders.

The UK insurance market is also subject to the Financial Conduct Authority's (FCA) regulations, which aim to protect consumers and maintain market integrity.

The FCA's Prudential Regulation Authority (PRA) oversees the financial stability of insurers, ensuring they have sufficient capital to meet their obligations.

The UK insurance market has been affected by various factors, including Brexit and the COVID-19 pandemic, which have led to changes in consumer behavior and market trends.

Pool Re has signed up Aon Securities and Howden Capital Markets & Advisory as its insurance-linked securities advisors. This move suggests that Pool Re is preparing to return to the catastrophe bond market.

Aon Securities and Howden Capital Markets & Advisory are experienced firms in the ILS advisory space. They will likely provide valuable guidance to Pool Re as it navigates the market.

Pool Re is a UK government-backed mutual terrorism reinsurer, making it a unique player in the insurance industry. Its expertise in terrorism risk management is likely to be an asset in the catastrophe bond market.

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Pool Re has successfully issued a £100 million terror catastrophe bond, known as the Baltic PCC Limited (Series 2022-1), which received strong investor support.

The bond's issuance has helped increase the size of Pool Re's retrocession tower to £2.5 billion, up from £2.475 billion the previous year.

Pool Re aims to streamline its finance and investment processes with the help of Clearwater, a SaaS-based investment management provider.

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Pool Re has reduced its reinsurance pricing, with the adjustments taking effect from October. This change will impact businesses and individuals who rely on Pool Re for reinsurance.

The extent of the reduction will vary depending on geographical location, with Pool Re stating that pricing will decrease by approximately 20% outside Zone A, which includes central London.

Pool Re is aiming to streamline its finance and investment processes by transitioning to a single instance, multi-tenant platform.

This new platform will support its investment accounting and reporting process, replacing the current custodian-based model.

Clearwater's partnership with Pool Re will enable the UK reinsurer to manage its finances more efficiently.

Pool Re is Britain's government-backed terrorism reinsurer, and this partnership is a significant step towards modernizing its operations.

By streamlining its finance and investment processes, Pool Re can reduce costs and improve its overall performance.

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