Cyber terrorism covered by Pool Re

29 May 2018

From 1 April 2018 companies which purchase UK terrorism insurance through insurers who are Pool Re members can now benefit from coverage for terrorism, caused by a cyber event.
Pool Re, the UK Government sponsored terrorism reinsurance pool, has now introduced cover for terrorism resulting from electronic means. This enables insurance companies who are members of the Pool Re scheme to expand their terrorism coverage.

The UK terrorism threat is unprecedented. In 2017 there were five terrorist attacks and at least ten disrupted attacks. These recent attacks have been carried out by terrorists using a variety of means, ranging from homemade bombs to items commonly available such as kitchen knives and cars.

The terrorist threat is constantly changing with security and counter terrorism experts warning that cyber terrorism may be the next tactical shift if, and when terrorists are able to harness cyber capabilities in order to cause damage to property or loss of life.

The Emerging Threat Of Cyber Terrorism

The advancements of computer technology, including the increased networking of facilities, equipment and industrial controls has been a huge benefit for businesses, with all large companies being heavily reliant on the use of computer networks in some form.

As businesses have benefited from the improved efficiencies, there has been a corresponding increase in the amount of security challenges. This is in part due to the proliferation of digital devices and the increasing frequency of which these devices are connected to physical systems.

It is increasingly possible for a terrorist (either a lone wolf or a cell), to gain remote access to a manufacturing, processing or another industrial facility and alter the control algorithms of that site or disrupt the flow of data to mislead automated systems into a certain response to engineer a property damage event.

Insurance Solutions For Cyber Terrorism

Property Insurance

UK property insurers (who are Pool Re members) will now provide cover in property policies for property damage and the resulting business interruption caused by cyber terrorism.

Political Violence & Terrorism

Standalone Political Violence and Terrorism Insurers (who have historically been able to provide more tailored cover in comparison to the traditional UK property insurers) are able to provide similar cyber terrorism cover for property damage following a cyber attack and are continuing to develop their offerings in this area. Cover for cyber extortion is also available from Kidnap & Ransom insurers.

Cyber Terrorism

JLT’s cyber team have consistently provided terrorism cover in respects of a cyber loss. There are four main exposures that can be impacted by cyber terrorism (see table below). Our cyber team have negotiated insurance coverage for all four main exposures.

Cyber terrorism covered by Pool Re


As with a ‘conventional’ terrorist attack, in order for a business to benefit from Pool Re’s cyber terrorism coverage, the Treasury will have to certify that the cyber event can be deemed an Act of Terrorism. The definition requires the activity directed towards the overthrowing or influencing of the UK government or any other government de jure or de facto. Given the complex nature of cyber risks, the primary motive of a cyber attack maybe difficult to determine.

Importantly, attacks that are carried out by state actors or organisations acting on behalf of state actors are excluded from the coverage which Pool Re provides.

In view of the developing tactics of terrorists, the increasing amount of interconnectivity between digital devices and physical systems, the Pool Re development of cyber terrorism reinsurance represents a positive change for the UK insurance market.

Pool Re plans Non-damage Business Interruption coverage

The UK Government have announced its intention to legislate for a change in Pool Re which would enable Pool Re to provide reinsurance cover for non-damage terrorist events.

This would present another positive development in the UK insurance market as it would allow more insurers to provide non damage terrorism coverage.

Currently, Pool Re can only pay claims if physical damage has occurred to commercial property. This means that if a company suffers a financial loss through not being able to access their property or to trade, for example due to a police cordon, there is only coverage if there has been physical damage during a terrorist attack.

The government have not announced a precise time frame for this legislative change to take place and the scope of cover that will be available is unclear.

However, cover for non-damage Business Interruption resulting from terrorism and related events is available from the standalone political violence and terrorism insurance market.

For further information on how Pool re changes could affect your property insurance contact:

Felix Ukaegbu
JLT Specialty
+44 (0)20 7558 3724

To discuss cyber solutions contact:

Jack Lyons
Head of Cyber Broking
JLT Specialty
+44 (0)20 7528 4114

For further information on how we can support organisations with terrorism cover contact:

Raj Rana
Head of War and Terrorism
JLT Specialty
+44 (0)20 3059 7054