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Consultations & legislation
13 December 2004
Following consultation with the insurance and commercial property industries, the Treasury has today published a set of general principles of interpretation that it would expect to be guided by in its application of the definition of an ‘act of terrorism’ under the Retrocession Agreement between HM Treasury and Pool Re, made in accordance with the Reinsurance (Acts of Terrorism) Act 1993.
The principles are aimed at professionals working in the insurance industry as a clarification of the existing cover provided through the Pool Re arrangements. View a copy of the principles .
HM Treasury and Pool Re have also agreed to review the technical detail of the Retrocession Agreement to ensure that it is delivering the intended outcomes and that it is up-to-date where circumstances have changed since 1993.
The government and insurance industry continue to work in partnership through the Pool Re scheme to ensure that terrorism cover remains available for commercial property and business interruption in Great Britain.
1. Under the Retrocession Agreement between HM Treasury and Pool Re, made under the Reinsurance (Acts of Terrorism) Act 1993, the Treasury has a role in certifying whether a particular incident falls within the definition of an ‘act of terrorism’ and hence whether covered by the Pool Re arrangements. These general principles of interpretation would guide HMT in its application of the definition.
2. The principles issued today do not change the scope of cover provided through Pool Re but clarify the existing situation.
3. The review of the Retrocession Agreement is a technical exercise aimed at ensuring that the Agreement, which was made in 1993, is up-to-date.
4. Pool Re was set up in 1993 to ensure that terrorism insurance for commercial property would continue to be available in Great Britain, following the withdrawal of reinsurers from the market. HM Treasury is the reinsurer of last resort for Pool Re, protecting it in the event that it exhausts all its financial resources following claim payments.
5. Following 11 September 2001, a package of measures was agreed in July 2002 to extend the coverage of the Pool Re scheme from terrorist incidents involving fire and explosion to an “all risks” basis. Treasury press release reference 73/02 gives an overview of the changes.
6. Media enquiries should be addressed to Will Straw at the Treasury press office on 020 7270 4420.
7. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk.
