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Reinsurance: Acts of Terrorism
Lord Oakeshott of Seagrove Bay asked Her Majesty's Government:
- Whether, in respect of reinsurance cover against acts of terrorism provided for property wholly or partly in industrial or commercial usage in Great Britain and reinsured through the Pool Reinsurance Company Limited following the Reinsurance (Acts of Terrorism) Act 1993, they are contractually bound under the Retrocession Agreement to meet any deficit in the insurance fund and are therefore the reinsurer of last resort with unlimited liability; and, if so, whether this unlimited reinsurance cover would also be available to meet claims if such buildings suffer damage occasioned by war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power; and[HL757]
(a) For what reasons they would use their power to terminate the Retrocession Agreement between Her Majesty's Treasury and the Pool Reinsurance Company Limited with only 120 days' notice; (b) for how long they intend to keep the Retrocession Agreement in force; and (c) whether they will undertake not to terminate the Retrocession Agreement unless undoubted alternative reinsurance cover is available; and[HL758]
What are their definitions, for insurance purposes, of an act of terrorism and an act of war (whether declared or not); and whether on their definition an act of terrorism can also be an act of war.[HL759]
Lord McIntosh of Haringey: The Government are committed to ensuring the continued availability of insurance cover for damage caused by terrorist attacks on industrial and commercial property in mainland Great Britain. The Retrocession Agreement was made following the decision of commercial reinsurers to limit the cover that they would offer in the UK market-place. The cover that is provided, as defined in Section 2 of the Reinsurance (Acts of Terrorism) Act 1993, deals with the shortfall. The Government act, in effect, as reinsurer of last resort with unlimited liability within the terms of the 1993 Act.
There is no single statutory definition of an act of terrorism or an act of war. Particular cases would have to be considered in light of the applicable statute and the terms of the insurance policies in question.
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