The Risk Of Terror Attack Is Very Difficult To Assess During Olympics

02-05-2012

According to the state-backed British reinsurer, Pool Re 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. Under the Pool Re structure, bombings or other incidents costing more than that amount would be covered by the British taxpayer was put together in the 1990s when the government feared the activities of Irish militant groups could make London property uninsurable and damage the economy.

Pool Re was set up in 1993 after a wave of Irish Republican Army bombings in the City of London. The reinsurer which covers damage to commercial real estate only, charges its customers annual premiums and meets claims by drawing on its assets, currently worth about 4.5 billion pounds. Moreover, 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.

Steve Atkins, Pool Re Chief Executive said that 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 added that 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. 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.

Mr. Atkins said that the biggest loss of Pool Re 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. In addition, losses from the July 2005 bomb attacks on the London transport network are still being finalized, but are expected to reach the double figures of millions.