Category: Other specialty · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
Pool Re is the common name for Pool Reinsurance Company Limited, the UK mutual reinsurance scheme providing terrorism reinsurance to its member insurers; established under the Reinsurance (Acts of Terrorism) Act 1993 in response to the early-1990s IRA mainland campaign, with HM Treasury providing the ultimate financial backstop, Pool Re is the principal mechanism by which UK commercial property terrorism insurance cover is provided at affordable rates.
Category: Other specialty Also known as: Pool Reinsurance, Pool Reinsurance Company Limited First codified: Reinsurance (Acts of Terrorism) Act 1993; Pool Reinsurance Company Limited established 1993 Related legislation: Reinsurance (Acts of Terrorism) Act 1993 [1]; Terrorism Act 2000 [2]; Companies Act 2006 [3]
Pool Re (Pool Reinsurance Company Limited) is a UK mutual reinsurance company providing terrorism reinsurance to its member insurers. The company was established in 1993 by Act of Parliament — the Reinsurance (Acts of Terrorism) Act 1993 — in response to the inability of the commercial insurance market to provide affordable terrorism cover following the IRA mainland campaign of the late 1980s and early 1990s. The 1992 Baltic Exchange bombing (insurance losses of approximately £350m at the time) and the 1993 Bishopsgate bombing (approximately £1bn) had driven commercial terrorism cover from the market [4][5].
Pool Re operates as a mutual: its members are UK commercial insurers writing UK commercial property terrorism cover, who cede the terrorism reinsurance to Pool Re. Pool Re collects reinsurance premium from member insurers, pays terrorism claims to member insurers when qualifying events occur, and maintains reserves between events. Behind Pool Re’s own resources stands the HM Treasury backstop: if Pool Re’s reserves are insufficient to meet claims, HM Treasury provides the additional funds, with Pool Re repaying HMT from future premium income [4][5].
The Pool Re scheme covers terrorism damage to commercial property and consequential business interruption arising from acts of terrorism within Great Britain (Pool Re’s scope was extended to include Northern Ireland in 2018). The scheme covers the major commercial property classes including offices, retail, industrial, hotels, leisure facilities and certain residential blocks of flats. The scheme has been progressively extended to include CBRN (chemical, biological, radiological and nuclear) terrorism (2002), railway property terrorism (2018), and cyber terrorism (under the 2018 expansion). Residential property terrorism cover is provided by the private market rather than by Pool Re [4][5].
The Reinsurance (Acts of Terrorism) Act 1993 is the principal statutory basis. The Act empowers HM Treasury to enter into reinsurance arrangements covering acts of terrorism. The Act has been amended several times to expand the Pool Re cover including the introduction of CBRN cover (Counter-Terrorism Act 2008) and other extensions [1][6].
Pool Reinsurance Company Limited is incorporated under the Companies Act 2006 as a private company limited by guarantee. Its constitutional structure (Articles of Association and Memorandum of Understanding with HM Treasury) governs the relationship between Pool Re, its members and the Treasury. The Board of Pool Re is appointed by the members with Treasury observation rights [3][7].
Pool Re is authorised as an insurance undertaking by the Prudential Regulation Authority and regulated for conduct purposes by the Financial Conduct Authority. The scheme operates under Solvency II prudential requirements adapted to its mutual nature and the special characteristics of terrorism reinsurance [8].
The certification of events as ‘acts of terrorism’ qualifying for Pool Re cover is performed by HM Treasury, acting on advice from the Pool Re board and external consultants. The certification process is critical to claims handling and is governed by detailed protocols. Major events have been certified within hours or days of occurrence (the 2017 Westminster Bridge, Manchester Arena and London Bridge attacks were each certified by HM Treasury, with most resulting in only modest commercial property claims given the locations involved) [4][5][9].
The Terrorism Act 2000 (section 1) provides the legal definition of terrorism that informs the Pool Re definition. The definition requires the use or threat of action involving serious violence, serious damage to property, endangering life or similar; the use or threat being designed to influence government or intimidate the public; and being made for political, religious, racial or ideological cause. The Pool Re cover responds to events meeting this definition where certified by HM Treasury [2].
Pool Re members (essentially all UK commercial insurers writing UK commercial property terrorism cover) write terrorism cover to commercial property owners as an extension or endorsement to their main property programmes. The terrorism exposure is then ceded to Pool Re under the scheme’s mandatory ceding arrangements [4][5].
Pool Re collects reinsurance premium from members based on the terrorism premium they have charged to insureds, less a defined retention. Premium income is invested by Pool Re and accumulates as reserves available to pay future terrorism claims. The scheme’s reserves at the time of writing exceed £5bn, providing substantial capacity before HM Treasury backstop would be required [4][5].
Major commercial property terrorism events trigger claims under member insurers’ policies, with the member insurer paying the policyholder and recovering from Pool Re under the reinsurance treaty. Pool Re processes the recovery claim and pays the member insurer subject to the scheme’s terms. The HM Treasury certification process is critical: only certified events qualify for Pool Re cover [4][5].
The scheme has been substantially evolved over time. The original 1993 cover was limited to commercial property damage with significant exclusions; subsequent reforms have expanded the scope to address evolving terrorism threats including CBRN (2002), railway property (2018), CBRN extension to all classes (2018), cyber terrorism (2018), and various scope clarifications. The expansion process involves Pool Re proposing changes to HM Treasury, with Treasury approval required for material changes to the scheme’s scope and economics [4][9].
The scheme has also paid out on major events including the 1996 Manchester city centre bombing (substantial commercial property damage), the 2001 attacks on the World Trade Centre (with claims affecting UK-domiciled subsidiaries of US-headquartered tenants), and various smaller events. The 2017 London terrorism events (Westminster Bridge, Manchester Arena, London Bridge) generated certification by HM Treasury but only modest commercial property claims given the locations affected [4][9].
Pool Re main scheme: the dominant scheme providing terrorism reinsurance to member insurers for UK commercial property.
CBRN extension: cover for chemical, biological, radiological and nuclear terrorism, introduced in 2002 and expanded in 2018.
Railway property extension: cover for railway property terrorism, introduced in 2018.
Cyber terrorism extension: cover for cyber attacks meeting terrorism definitions, introduced in 2018.
Northern Ireland extension: cover for Northern Ireland, introduced in 2018.
Standalone non-Pool Re cover: private market terrorism cover for risks outside the Pool Re scheme (residential property, certain commercial exposures, international exposures).
Specialty terrorism: specific terrorism cover for marine, aviation, energy and other specialty classes not within the Pool Re main scheme.
A UK commercial insurer writes property all risks cover for a UK commercial property portfolio of £2bn insured value. The terrorism extension to the property cover is reinsured to Pool Re under the mandatory ceding arrangements. The annual terrorism premium from the insured is approximately £400,000, of which the insurer cedes a substantial proportion to Pool Re as reinsurance premium under the scheme. During the policy year, no terrorism event affects the insured properties. Had a major terrorism event occurred causing significant property damage, the primary insurer would have paid the policyholder and recovered from Pool Re under the reinsurance treaty, subject to HM Treasury certification of the event as an act of terrorism qualifying for Pool Re cover. Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
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