Insurers Ask Gov't To Approve State-Backed Reinsurer

By Martin Croucher
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Insurance UK newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360, London (June 4, 2020, 4:25 PM BST) -- Britain must establish a state-backed reinsurer capable of picking up the tab for major losses from cyberattacks, pandemics and climate change, insurance industry campaigners said Thursday.

Liz Foster of the Society of Insurance Broking and James York, founder of insurance technology company Worry & Peace, have created the outline for TotusRe. The proposed "super perils" reinsurer would take on risks of pandemics in the future and other potential systemic catastrophes that insurers would ordinarily refuse to cover.

"As U.K. businesses look to re-establish a version of normal, we want to make sure they are adequately supported by the insurance industry to allow them the confidence to get back on track," Foster said.

"My request to professional bodies is to please use the powerful voice of your organization to call upon the chancellor to agree the TotusRe model, and thus support U.K. businesses as they move forward from COVID-19."

The reinsurer would take on responsibility for major losses from hazards in the government's National Risk Register, including terrorism, climate change incidents, major cyberattacks, pandemics and flooding. 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.

Establishing such a reinsurer now would ensure there are fewer disputes over cover when major incidents occurred in future, the campaigners behind the proposed company said.

"We cannot waste any more time in developing a proactive solution before individuals and businesses find themselves at best unable to afford business interruption insurance, and at worst that the market will not provide such insurance," they said in a statement.

The U.K. already has Pool Re, a state-backed terrorism reinsurer as well as a reinsurer for flooding called Flood Re.

A steering group has been established under Pool Re for the creation of a specialized reinsurer, to be called Pandemic Re, backed by chief executives of major U.K. insurers and former home secretary Amber Rudd.

Meanwhile, Lloyd's has floated the idea of a reinsurer to help businesses get back on their feet, which would be called Recover Re.

--Editing by Rebecca Flanagan.

For a reprint of this article, please contact reprints@law360.com.

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!