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Pool Re accepts Treasury reforms

Pool Re members have voted to accept a UK Treasury-proposed shake-up to ensure the future of the British terrorism pool.

An extraordinary general meeting was held in London last week to discuss the plans, which will see Pool Re hand over a greater share of premiums in return for the unlimited government guarantee.

Currently the premium paid by member companies is split, with 90% going to Pool Re and 10% taken by Treasury.

Pool Re says it secured a number of concessions, including commitment to a significant modernisation program.

Treasury also confirmed that any additional premium received will continue to be offset against the loan amount payable by Pool Re in the event that Treasury is called upon to pay a claim.

Pool Re Chairman Tony Latham says members voted unanimously in favour of the new arrangements.

“In the context of where the discussions began, the concessions which have been secured as well as the acceptance [by Treasury] of the modernisation plans which we wish to pursue, I am sure that this agreement will benefit our members, original policyholders and the insurance industry as a whole,” he said.

“This vote has secured the long-term future of Pool Re and, as a result, the provision of terrorism insurance in Great Britain.”

Pool Re was set up as a mutual insurer in 1993 in response to the IRA bombing campaign, and most UK insurers offering commercial property cover are members.

In the event of a terrorism loss insurers pay up to an individually determined threshold before claiming on Pool Re’s reserves of £5.5 billion ($9.92 billion).

The unlimited government guarantee kicks in only when those reserves are exhausted.