Could you be eligible for the terrorism premium discount?

15 February 2018

The topic of risk management is becoming more relevant for UK commercial real estate investors. Good risk management has long been recognised by property and business interruption insurers often resulting in improved premium terms and conditions. We are now seeing the UK terrorism market following suit driven by a recently announced Pool Re initiative. In our latest bulletin, we look at the premium reduction initiatives that could benefit your portfolio from 1 April 2018.

Who is Pool Re?

Following the IRA’s bombing campaign in the 1990’s, reinsurers withdrew their cover for terrorism related damage. Pool Re was established in cooperation with, and supported by HM Treasury, to provide property damage and business interruption terrorism reinsurance for its insurer members.

Pool Re currently reinsures over GBP 2 trillion of commercial property exposure throughout the UK.

On 30 September 2017 Pool Re issued an updated underwriting manual. There are several important changes which take effect from 1 April 2018. These new initiatives include:

  • Cyber-terrorism – provides cover for damage caused by terrorists using remote digital interference
  • Crowded places – increased discount from 2.5% to 5%
  • Vulnerability self-assessment test (VSAT) – provides up to 5% discount for satisfactory completion of self-assessment where the insured does not already benefit from the Crowded Places scheme.

Cyber Terrorism

Following studies undertaken by the Centre for Risk Studies at Cambridge Judge Business School, Pool Re have introduced cover for property damage and resulting business interruption from a cyber attack.

This cover is to be offered as standard to all existing insureds that purchase terrorism insurance through a Pool Re member. No additional premium charge will be levied.

What is crowded places?

The National Counter Terrorism Security Office (NaCTSO) is a police unit that supports the 'protect and prepare' strands of the government’s counter terrorism strategy. Their primary role is to provide help, advice and guidance on all aspects of counter terrorism protective security to specified industry sectors.

Should the insured participate in the UK Government’s NaCTSO Crowded Places programme, then they would be eligible for a terrorism premium discount of 2.5% although this is forecast to increase to 5% with effect from renewals post 1 April 2018.

What is VSAT?

VSAT is a new risk management initiative which has been introduced to eligible insureds that conduct an online security audit to UK government and internationally recognised standards.

It will identify the organisations vulnerability and provide advice on physical and personnel security along with risk management guidance on how to mitigate the risk to their business and the surrounding areas.

Who is eligible?

It is available to insureds who have a portfolio aggregates to a declared value of GBP 50 million or above in terms of property damage and does not consist primarily of private dwelling houses and flats.

Anyone that has knowledge about the security of the site or business is able to complete the self-assessment. It’s free of charge and depending on occupancy type the question set ranges from 50 to 120. Multi-site portfolios will need to complete between two and 12 assessments.

How do you apply?

To apply, the self-assessment must be completed and in order to qualify for the discount, a minimum threshold has to be reached.

The self-assessment is aimed at property business however, can also be available for portfolio’s with a minimum number of assessments to be completed to meet the requirements under the Pool Re guidelines.

The resulting report will indicate whether the threshold has been met, however any discount applied will be the responsibility of the insurer to confirm. Should the result confirm the threshold has not been met the insured has the option to introduce the subsequent recommendations, then take a re-assessment.

Whilst it is the requirement of the insurer to confirm whether a re-validation is required at renewal the process must be completed no less than once every three years.

The insured will be able to access VSAT by clicking on the link

What and when is the discount available?

With effect from 1 April 2018 the discount for Crowded Places scheme has increased from 2.5% to 5%. The VSAT discount mirrors this with a maximum of 5% being available.

The discounts however cannot be aggregated and therefore should the insured receive 5% from the Crowded Places Scheme this is the maximum they can receive and the VSAT discount would not apply.

JLT’s Terrorism Analytics and Advisory Capabilities

Our team supports clients to understand their risk of terrorism through analysis of threat, vulnerability and impacts. The team brings a fresh perspective to terrorism risk within the insurance sector and works closely with clients to insure that their risks are clearly understood. The team developed and operate Sunstone™ JLT’s proprietary terrorism risk model. Projects range from threat analysis to portfolio risk assessment, scenario impact analysis, probable maximum loss studies and site surveys.

How JLT’s Terrorism Analytics and Advisory can help with VSAT

We can support and advise clients during the VSAT process. JLT has significant experience conducting site surveys to review the effectiveness of physical, technical and procedural security measures and security policies against the ambient threat. These have been conducted globally across a broad range of industrial sectors. We can provide clarity of security provision and make recommendations for improvement in support of the VSAT process.


These premium incentives, in recognition of a well-defined risk mitigation strategy, will clearly enhance the proposition to tenants differentiating your assets from others in a highly competitive leasing market.

Download Risk Focus

For further information contact David Sabine, Associate on +44 (0)20 7558 3337 or email