September 26, 2017 / 3:15 PM / in 21 days

UK terror reinsurance fund seeks to extend coverage

LONDON, Sept 26 (Reuters) - Britain’s Pool Re, which helps insurers pay out claims on property damage caused by terror attacks, is in talks with the government to extend cover to businesses that suffer indirectly from an attack, such as through loss of custom.

The 6 billion pound ($8 billion) reinsurance fund was set up in 1993 to backstop insurers paying out claims on property damage from attacks deemed by the UK government to be terror-related, as well as business interruption due to such damage.

Some recent attacks in Britain and elsewhere in Europe, however, have caused businesses to close or lose custom but have not involved much property damage.

“Pool Re has been working to fill the previously unforeseen coverage gap since the attacks in Europe last year,” it said on Tuesday in its latest terrorism threat and mitigation report.

“In light of the recent spate of UK attacks, intensive talks at ministerial level are now under way.”

The extension of cover, for instance through reinsuring non-damage business interruption insurance, requires a change in UK law, Pool Re said.

Small and medium-sized enterprises can be affected for up to nine months by an attack or even by concern about security, and suffer losses of up to 30 percent of annual revenue, Pool Re said.

Pool Re is financed by the insurance industry with government backing. Pay-outs depend on the British government deeming an attack to be terror-related.

Pool Re will also from next year start offering reinsurance for a fire or explosion caused by a cyber attack that is deemed to be terror related, it said in Tuesday’s report.

$1 = 0.7443 pounds Reporting by Carolyn Cohn; Editing by Mark Potter

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