The Bermuda Reinsurance market won a measure of gratitude from one of the architects of a matrix for the financing of terrorism risks.

It came from outgoing CEO of Pool Re Julian Enoizi, a key figure in the expansion of British mutual reinsurer, Pool Reinsurance Company Limited.

Pool Re is a near 30-year-old company established by the British insurance industry and backed by the British government.

Its members are 150 insurers and Lloyd’s syndicates, which provide in-country commercial property insurance. Members are afforded guarantees, which ensure they can provide cover for losses resulting from terrorism, regardless of the scale of the claims.

One key to Pool Re’s success was its government guarantee – the payer of last resort should the reinsurer be overwhelmed. But as Pool Re’s reserves have been accumulating since its inception, it has also paid a premium to the UK government for that guarantee.

Mr Enoizi has just left Pool Re, and last week was named as global head of public sector at Guy Carpenter.

Before his move, he made the case for the renewal of that powerful government commitment, and successfully proposing there remain no cap on the government guarantee.

He talked about it at the recent Bermuda Risk Summit: “In 28 years, the guarantee had never been called on,” he said. “The taxpayer has never paid a loss.

“But we have used that guarantee to develop a business which has basically put the government of the United Kingdom £12 billion to $15 billion away from any form of loss. And that's a tremendous achievement and a really good use of the government guarantee.

“And we viewed that the interests of government and the interests of the industry were symbiotic. The industry wants to grow profit opportunity and the government wants to protect its taxpayers.

“Well, how do you do that? You get the private market to play a larger role. But it only works if the partnership is equal. The partnership had to be equal.

“But what we also found was that we grew Pool Re in that time by 10 per cent. So, the company grew by 10 per cent, but the commercial market grew fourfold. The commercial market was virtually non-existent in 2015.

“Today, the commercial market is about 110 million sterling and Pool Re is about 310 million Sterling. So there was a massive increase in the commercial market, which took more and more risk.”

“And I should pause at this moment to thank you in the Bermuda reinsurance market, because your participation in the two and a half billion pounds that we managed to put into the reinsurance marketplace is £770,000,000, a significant share of what this journey that I'm describing to you has been about. You have come and put capital at risk in London to protect the UK taxpayer from loss.”

Pool Re has grown the understanding of terrorism risk enormously, helping the insurance and reinsurance industry to be more comfortable about their participation.

To do that, they became a repository for information and consulted far and wide to build a database of knowledge.

They realised the template they had developed could be used elsewhere, for other big ticket risks.

Mr Enoizi talked about the development of a “national risk register” and an economic model that allows industry to assume appropriate levels of risk, while the customer and the government also retain some measure of responsibility.

He sees these as necessary measures in the future for financing cyber-risks to avoid massive protection gaps where risks are not covered.

He said: “The other thing about cyber, which I think is quite interesting, is whether or not we've learnt the lessons of the pandemic.

“Because, of course, there are a lot of issues, certainly in the UK around definitions of what was, and what wasn't, covered.

“And yet, here we are today with a terrorism definition that's 30 years old. If you read it, you will see holes all over it.

“You have a war definition which is 100 years old. It still requires a declaration of war. I'm trying to think when the last declaration of war was. I think it was 1939.

“If you look at cyber, where does that fit within a modern definition of war? Where does economic war sit within a modern definition of war? If you have a cyber attack and it's backed by a nation state or a state actor, where does that fit?

“Is that an act of terrorism? Is it an act of war? Or is it neither? And if it's neither, it falls between the gap and there you have yet another terrorism gap.”