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15 U. Pa. J. Int'l Bus. L. 441 (1994-1995)
Brittish Government Reinsurance and Acts of Terrorism: The Problems of Pool Re

handle is hein.journals/upjiel15 and id is 453 raw text is: COMMENTS BRITISH GOVERNMENT REINSURANCE AND ACTS OF TERRORISM: THE PROBLEMS OF POOL RE WILLIAM B. BICE* 1. INTRODUCTION The British government has agreed to become the reinsurer of last resort' for losses caused by terrorism on the British mainland2 through an alliance with Pool Reinsurance Company (Pool Re), the mutual reinsurance company formed by the British government to provide reinsurance cover for losses due to acts of terrorism.3 As premiums have skyrocketed, however, Pool Re has been criticized and many businesses and property holders have abandoned cover altogether. This Comment analyzes the Pool Re. system, considers its shortcomings, and suggests modification of the system based on existing reinsurance models. Section 2 of this Comment analyzes the role of reinsurance in the property insurance market by employing various economic examples to explain risk spreading through reinsurance. Section 3 discusses the terrorism exclusion in Great Britain and its projected effect on reinsurance * J.D. Candidate, 1995, University of Pennsylvania Law School; A.B., 1991, Duke University. I gratefully acknowledge receipt of the annual Samuel F. Pryor, III, Prize for Most Distinguished Comment. It is an honor to receive this award. I also would like to thank Jeanne and my family for their invaluable assistance in this endeavor. ' Paul Durman, Government Shares Bomb Insurance, THE INDEPENDENT, Dec. 22, 1992, at 1. - The British mainland includes England, Scotland, and Wales. See Aline Sullivan, Bomb Claims May Top $630 Million, Bus. INS., May 3, 1993, at 1 (discussing the government's arrangement with Pool Re). Northern Ireland is covered under a separate plan discussed at infra section 6.2. ' Reinsurance Act (Acts of Terrorism), 1993, Ch. 18, § 2(a) (Eng.). The British government has entered into an agreement with Pool Re to act as its reinsurer. See Sullivan, supra note 2, at 46. (441)

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