Pool Re gets green light to take cyber

The UK government has given Pool Re permission to extend its coverage to include cyber perils—a move that has been warmly welcomed by the company.

Julian Enoizi, chief executive, Pool Re, told Monte Carlo Today that he had felt for some time that covering the physical implications of a cyber attack was the right thing to do and that the green light from the government was the culmination of several years of hard work in this area.

Enoizi explained that when Pool Re’s coverage was extended in 2002 from covering ‘named perils’ to ‘all risks’ including chemical, biological, radiological or nuclear (CBRN), a cyber exclusion was added. He said that such exclusions were then common in policies in the aftermath of the so-called Millennium bug, also known as Y2K.

“Over time the terrorism threat has evolved. A couple of years ago we identified the fact that physical damage could theoretically be caused using remote digital means. We felt it would be wrong, after a loss of that nature, to exclude it. Physical damage is physical damage, no matter how it’s caused.

“If it’s terrorism and it has a physical impact then we should be covering it,” Enoizi said.

“We explained that point to the UK government and they agreed. We then collaborated with academics to understand what was possible, who was likely to be doing it, and what the causes and amounts of damage might be.”

Pool Re worked with the University of Cambridge Judge Business School, which specialises in this area, and started a project to explore the topic in more detail.

“They produced a report that we shared with our stakeholders and, on the basis of that report, we decided we could extend the coverage. We couldn’t insure contingent business interruption, which would be too broad, but the physical damage arising out of a cyber trigger could be something that we could and should insure,” said Enoizi.

He stressed that this kind of coverage has to be continuously adapted to cope with developing changes in the nature of terrorism.

Pool Re will now work with the UK government on the finer details, with a view to issuing underwriting guidelines at the end of September. The market then has six months to implement the new guidelines on cyber into their policies.

Get the latest re/insurance news sent to your inbox every day -  Sign up to our free email newsletters

Today’s Monte Carlo stories

Greenlight to benefit from market turn

Schroders launches ILS life fund; Lohmann mulls effect of buffer clauses

Hannover Re sees loss-driven rate rises

Swiss Re CEO warns on true risk of cyber cover

Irma wake-up call will propel rates in right direction: Markel

Limited expertise in cyber is a concern

NFIP reform could pave way for private market to participate

Reinsurers will need to ponder options if Irma becomes capital event

Swiss Re CEO’s vision for insurance

PERILS aims to be the ‘one-stop agency’ for nat cat data

Irma to have impact on US property rates

Leadenhall earns seat with the big boys

Euler Hermes sticks with tradition over naïve capital

Don't miss our insurtech email newsletter - sign up today