Insurance to compensate individual victims of terrorist attacks is likely to be considered in future, Julian Enoizi, CEO of U.K. terrorism reinsurer Pool Reinsurance Co. Ltd., has suggested.

Pool Re, with the help of a U.K. government guarantee, allows its insurer members to offer terrorism cover in their property policies by reinsuring them. The scheme, established in 1993, originally only covered commercial property damage. But as a result of the changing nature of terrorist attacks, it has expanded its remit over the years, and now includes cover for business interruption without property damage and commercial property damage triggered by cyberterrorism.

Enoizi said in an interview that further gaps in insurance coverage could emerge, and that the "obvious one" related to Martyn's Law — a campaign for new rules for security at concert venues by the mother of Martyn Hett, one of the victims of the bombing at the Manchester Arena in May 2017.

While stopping short of saying Pool Re was looking to add victim compensation to its remit, Enoizi said: "We have closed [coverage] gaps for businesses. What happens with victim compensation, I think, is an interesting question for the future."

He noted that there is a difference, for example, between compensation for road traffic accident victims and terrorism victims, and that there are questions about "whether or not that is equitable and whether or not there are insurance solutions that could redress the balance." He added: "I think those debates will be had in the future, no doubt."

Enoizi said the issue of victim compensation was "a big subject of discussion" at October's annual conference of the International Forum for Terrorism Risk (Re)Insurance Pools, or IFTRIP, an association of the world's terrorism insurance schemes for which Pool Re acts as secretariat.

Cyber conundrum

Another big subject for discussion at the IFTRIP conference was how to tackle cyberterrorism, Enoizi said. At the event, the association announced the launch of a cyberterrorism task force in conjunction with the Geneva Association, an insurance industry-funded think-tank. The task force will research cyberterrorism risk across the insurance and reinsurance industry and report its initial findings in mid-2020.

Enoizi said think-tanks that have analyzed the handling of cyberrisk around the world have generally concluded that the insurance industry needs some kind of backstop, but the debate now centers on how it should be designed.

A big problem is the definition of cyberterrorism, and where it stops and acts of war begin. Enoizi suggested that however it is defined, any event would be unlikely to fall neatly into the chosen definition, leaving a "gaping hole."

He said that whether the solution for the U.K. was an expansion of Pool Re's mandate or the creation of a similar 'Cyber Re' scheme "is a debate that the industry is having." But he also said that, like terrorism, cyberrisk is "another man-made, difficult-to-insure risk" and that there are "a lot of lessons" to be learned from the handling of terrorism risk.

He added that the important thing was striking the right balance between the risk borne by the pooling scheme and the private market, "making sure the pooling mechanism is left with the tail element of the risk and doesn't encroach into the area that the private market can handle alone."