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Cyber capability should be on parity with established aspects of terrorist armory: Pool Re


November 23, 2015   by Canadian Underwriter


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A potential shift toward cyber terrorism is among the factors contributing to the United Kingdom’s move last week to double funds set aside to combat cyber attacks, Julian Enoizi, chief executive of Pool Reinsurance Company Limited, notes in a recent post on the company’s website.

Potential shift toward cyber terrorism, U.K. to double funds to combat cyber attacks

It was reported last week that the U.K.’s Chancellor of the Exchequer George Osborne will double funding to strengthen cyber defences, spending £1.9 billion over five years to counter the Islamic State’s use of the Internet for planning, propaganda and online attacks. “Offensive” capability to combat hackers, terrorists, criminals and rogue states is also to be developed, Osborne noted.

Although the focus on doubling funds is expected, “perhaps of even greater importance in the Chancellor’s announcements today was the simple fact of his placing cyber capability on parity with established aspects of the terrorist armory – guns, bombs and knives,” Enoizi of Pool Re, a mutual reinsurance company established as a public-private partnership that provides terrorism insurance coverage for commercial property and business interruption, notes in the post.

“Including cyber terrorism in this way is for many a long overdue development, and recognizes the potential devastating impact of a cyber attack on the physical world as well as the digital one,” he writes.

The recent terrorism events – including the seven co-ordinated attacks Nov. 13 in Paris – reveals key strategic changes adopted by the organization calling itself ISIL: an apparent move into cyber terrorism; a move towards the organization and execution of terrorist attacks on countries of the Western Alliance; and an enlarged range of targets (including small businesses and community venues, as was the case in Paris).

“This critical shift makes the urgent job of anticipating future targets significantly more difficult,” Enoizi notes of the last point.

Having a legal obligation to facilitate the provision of terrorism insurance in the U.K., Pool Re “has an implied, and I believe even moral, obligation to promote resilient cities,” he suggests.

Julian Enoizi

“In this regard, particularly given the evolving threat of attacks on small businesses, Pool Re has set about increasing the take-up of terrorism insurance by small businesses owners. To do so, it has introduced premium discounts of up to 40%,” Enoizi (pictured right) writes.

Looking to promote resilience, Pool Re has entered into a partnership with the National Counter Terrorism Security Office (NaCTSO) – which promotes risk management activities to minimize the potential for attacks, and to promote security measures – and was established to incentivize the Property Security Improvement Activity designed by NaCTSO. The partnership “should improve the resilience of crowded places and key sites of employment and commerce,” Enoizi comments.

The recent events “have ramifications for terrorism reinsurance internationally and nationally,” he cautions in the post.

Today, Pool Re has a buffer of £7.3 billion to pay claims arising from terrorist acts, comprising capital and reserves exceeding £5.5 billion, and commercial retrocession worth £1.8 billion, Enoizi reports. Losses above that threshold activate an unlimited government guarantee.

As an organization, he writes, Pool Re has a significant potential role in the evaluation of this new terrorism risk. “The extent to which the scheme is able to respond in the future to cyber-terror attacks is limited by statute,” he states, adding that the company will work with its member insurers to help ensure U.K.’s “approach to the provision of terrorism insurance solutions is both seamless and world leading.”


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