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Law360, London (June 1, 2020, 10:16 PM BST) -- The creation of a U.K. pandemic reinsurance company took a step closer to reality on Monday with the appointment of former Home Secretary Amber Rudd to one of six working groups established to get the project off the ground.
The steering committee of the reinsurer, named Pandemic Re, said it has appointed more than 50 industry representatives to the working groups to work on anything from risk modeling to organizational structure.
It is the first update from the committee, which is comprised of U.K. insurance industry veterans, since it was established in April under the auspices of state-backed terrorism reinsurer Pool Re.
"The steering committee has made considerable progress by identifying working groups and business leaders to direct them as well as helping to determine the detailed activities for each work stream," said Stephen Catlin, chairman of the committee and founder of Lloyd's giant Catlin Group, prior to its acquisition by XL in 2015.
Rudd, who served as Home Secretary under Theresa May's government, will oversee a working group looking at the legal, regulatory and government implications of the reinsurer.
Insurers have come under fire for refusing to compensate businesses for losses during the lockdown. But industry groups say the pandemic is "too systemic" to allow private companies to offer protection against it, and have called for a government-led approach.
From the outset, Pandemic Re's steering group said it was looking for an "industry solution for future pandemics."
A reinsurer effectively insures a portion of the risk on any policy, limiting the amount an individual insurer has to pay out in a single claim.
Pandemic Re will likely follow the model established by Pool Re, which was founded after the Irish Republican Army attacks on London in 1992 at a time when insurers were pulling cover or denying claims.
Pool Re, which could become part of central government next year, relies on all members to contribute for major property losses caused by terrorism. If that reserve is not enough to pay out on claims, the reinsurer also has a £6.6 billion ($8.2 billion) fund built up over the years through members' contributions. The reinsurer can draw on government support if that becomes exhausted.
It is not clear whether Pandemic Re will overlap with another reinsurance project proposed last month by Lloyd's of London, called "Recover Re," which would offer cover to companies for business recovery, including during the pandemic.
--Editing by Adam LoBelia.
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