§ Mrs. LawrenceTo ask the Chancellor of the Exchequer how negotiations are progressing with industry on changes to the Pool Re scheme to take account of changes in the terrorism insurance and reinsurance markets since 1993 and in particular since 11 September 2001. [73100]
§ Ruth KellyToday I am announcing changes to the Pool Re scheme which will enable insurers to offer terrorism insurance across a wider range of risks. The outcome is part of a package of reforms which have been agreed by a government-industry working group set up to look at changes to Pool Re needed after 11 September.
The working group has reached agreement on the main changes to the scheme. The changes include extension of Pool Re cover from "fire and explosion" only, to an "all risks basis", to ensure that a terrorist attack involving, for example contamination, impact by aircraft, or flood damage could be covered by the scheme. This increased cover will be available in the next few weeks and will be reflected in higher premiums for the period covered. There will be an option to backdate to 1 January 2002. The existing exclusion for nuclear risks will also be removed as soon as practicable, and by 1 January 2003 at the latest.
Other changes to the scheme include changes to the financing of Pool Re to encourage competition, and changes to make governance arrangements more transparent in the public interest. These will take effect from 1 January 2003.
The details will need to be finalised over the coming months. Further information about these changes are published on the Treasury's website and in an explanatory statement in the House Library.