Pool Re and HM Treasury have struck an agreement to modernise the terrorism reinsurance scheme offered by the government-backed carrier. The deal will see the scheme move from a facultative treaty to an aggregate catastrophe excess of loss treaty.

Pool Re said this would give members more flexibility to underwrite terrorism commercial property damage and business interruption risks in line with their risk appetite.

Tom Clementi, chief executive officer at Pool Re, said: “Members and HM Treasury have given Pool Re a very clear and exciting mandate to continue Pool Re’s modernising journey. When Pool Re was founded some 30 years ago, it was never intended to be a permanent, static, and definitive solution.

"Our job was always to correct a market failure, and to provide opportunities for the industry to take more terrorism risk onto its own balance sheet and normalise the market. The change to an aggregate catastrophe excess of loss treaty is the best possible outcome for both members and the taxpayer.”

Bim Afolami, Economic Secretary to the Treasury, added: "Pool Re has worked hard on its plan to modernise its reinsurance offering, and I am pleased that Pool Re’s proposals are supported by its members as well as the Government.”