The Business and Trade Committee, responsible for scrutinising the Department for Business and Trade, has urged the Government to urgently expand reinsurance schemes like Pool Re to support private markets and bolster business resilience, particularly against cyber threats.
Given the current rise in cyber threats, the Committee explained that it has been carefully evaluating calls for greater Government intervention in the insurance market.
“When risks have been considered too significant or too uncertain for the market to provide adequate insurance cover, the Government has previously ‘re-insured’ the risks taken on by private insurers,” the Committee said, highlighting historical precedent.
It continued, “Pool Re, for example, is the longest-established Government-guaranteed reinsurance scheme and was created to stabilise the market for terrorism insurance for private properties following the IRA bombings in the early 1990s.”
The Committee underlined that the rise of state-backed cyberattacks has created similar and significant challenges for the insurance industry.
“Pool Re only covers attacks certified as terrorism by HM Treasury, yet the line between terrorism and hostile state activity is now very blurred,” the Committee noted.
It went on, “As the 2025 National Security Strategy notes, state actors may ‘make use of terrorist and criminal groups as their proxies.’ The losses arising from these incidents may be catastrophic, and in recent years, some insurers have updated their policies to explicitly exclude government-led cyber-attacks with war-like effects.”
Despite these challenges, the Committee observed that the Government has no plans to expand Pool Re’s remit to cover additional cyber risks.
With this in mind, the Committee concluded, “With greater and greater private ownership of public risk, there has never been a greater public interest in ensuring that private firms are able to prepare for disruption and recover quickly when it occurs.
Risk is inevitable in private enterprise, and the public purse should not be substituted for an effective market.
“However, the increasingly complicated threat landscape means that the time is now ripe for the Government to look again at the insurance market to ensure that it is functioning adequately.
“The Government should urgently consider expanding the scope of reinsurance schemes such as Pool Re to support private markets which enhance business resilience, particularly in respect of cyber threats.”
In an interview earlier this year, Jonathan Gray, Chief Underwriting Officer at Pool Re, highlighted a range of challenges preventing businesses from obtaining adequate terrorism insurance.
He said at the time that only around 4% of UK SMEs purchase such coverage, a shortfall his firm attributes as much to a “perception gap” as to cost.
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