(Fixes punctuation of quote in paragraph four)
* Pool Re checks coverage to prepare for potential attack
* No rise in premiums as terror risk difficult to assess
* Any cost beyond 4.5 bln pounds covered by the taxpayer
By Myles Neligan
LONDON, April 27 (Reuters) – Pool Re, the state-backed
British reinsurer that covers terror attack-related commercial
property losses, has 4.5 billion pounds ($7.3 billion) of assets
to cover the Olympic Games and is not jacking up premiums for
the event.
Bombings or other incidents costing more than that amount
would be covered by the British taxpayer under the Pool Re
structure, put together in the 1990s when government feared the
activities of Irish militant groups could make London property
uninsurable and damage the economy.
Pool Re Chief Executive Steve Atkins said his team had
closely scrutinised its customers’ exposure to the Olympic Games
to prepare itself for a potential attack during the event.
“We wouldn’t normally have interaction with every insurer on
every programme,” he told Reuters. “But with things like the
Olympics we tend to have done that so that if there were
anything, we’re already informed about what the insurance
arrangements are.”
Pool Re was set up in 1993 after a wave of Irish Republican
Army bombings in the City of London financial district
threatened to make commercial property uninsurable, stifling
investment in the sector.
The reinsurer, which only covers damage to commercial real
estate, charges its customers annual premiums and meets claims
by drawing on its assets, currently worth about 4.5 billion
pounds ($7.28 billion).
It can call on unlimited funding from the taxpayer in the
event of bigger losses, and hands 10 percent of its premiums to
the government in return.
Atkins said Pool Re had not charged its customers more in
the run-up to the 2012 Olympic games in London because the risk
of a terror attack “is very difficult to assess with any degree
of accuracy.”
Any increased risk this year, which will also feature public
celebrations to mark the 60th anniversary of the British
monarch’s coronation, will be partly offset by heightened
security measures, he said.
“We take the view that we’ve always got to be there and
ready to deal with a terrorist event if it occurs no matter how
unlikely it was assessed to be before it occurs,” Atkins said.
The British government currently believes the risk of a
terrorist attack is “substantial,” two notches down from the
highest “critical” level in its five-tier threat assessment
system.
Pool Re’s biggest loss to date is the 260 million pounds it
paid out after the Bishopsgate bomb in the City of London in
1993, followed by a 240 million pound hit from the 1996
Manchester bombing.
Losses from the July 2005 bomb attacks on the London
transport network are still being finalised, but are expected to
reach the double figures of millions, Atkins said.
Pool Re, whose customers include all the major property
insurers operating in Britain, has so far never had to draw on
the government’s funding backstop.
($1 = 0.6178 British pounds)
(Reporting by Myles Neligan; Editing by Andrew Callus)
