The Motor Insurers' Bureau hopes to secure £400m worth of reinsurance cover with an excess layer of £100m, ahead of the demutualisation of terrorism risks for third party motor on the 1 January 2019.
It is also close to signing a deal with a third party administrator to provide it with help during any major incident.
The news follows the vote by UK motor insurers in July for the MIB to handle and pay the claims from victims involved in a terrorist event, where a vehicle is used as part of said attack.
Paul Ryman-Tubb, the chief technical officer of the MIB, told Post Claims Club members this week: “We are doing lots of work to get ready for this. One of which, is looking for reinsurance for the MIB guarantee fund. The idea being to stop unwanted spikes in the levy.
“So this is proving quite complicated to do as we are not an insurer, but we are working closely with Aon and we are hoping to get that finalised in the next few weeks.”
Ryman-Tubb, pictured, also revealed that it had asked insurers for an additional £12m in the overall levy for 2019 in a letter sent out to member CEOs this month, to pay for the reinsurance cover and help it set itself up for the changes in the new year.
In terms of trigger issues, he added the MIB currently defined terrorism as outlined in Terrorism Act 2000. “However, now we have come to negotiate with reinsurers we realise that needs to change,” he continued. “They are only comfortable with terrorism as declared by government, which is what they are used to with HMT and Pool Re. And I think that is where we are going to land in terms of reinsurance cover so if that is the case we will have to line up the articles and make a small change.”
Ryman-Tubb noted insurers in discussion over their own reinsurance cover would also have to be aware of this to make sure were aligned with this definition too.
He added that it was trying to get to a place where it could have early notification of an event and get the registration of a vehicle, so it could get in contact with the insurer and let them know the MIB will take the lead until the point it is proven not to be terrorism.
“That is important so we can get on with it and the insurer [involved] knows what is happening; and that we can reach out to the [wider] market and let them know we are dealing with it with the relevant member.
“So if you have not had a phone call from me, you know it is not you and one of your customers.”
The MIB is working with the security services to get that early notification, Ryman-Tubb continued, alongside an outsourced partner to supply it with services including geo-fencing - to mine open source media channels to get information, helplines and extra claims handling capacity. He expected an announcement on this soon too, so that they would be in place by the end of the year.
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