Berkshire Hathaway Specialty Insurance Co. disclosed it has withdrawn from the Hong Kong Employees’ Compensation (EC) terrorism pool.
BHSI claims to now be the first insurer in Hong Kong to provide EC terrorism coverage to customers directly, backed by Berkshire Hathaway Specialty Insurance Co.’s financial strength. This decision benefits all BHSI’s new and existing EC customers for policies launching or renewing on or after Dec. 1, 2018.
The EC terrorism pool was established to provide terrorism cover for Hong Kong EC policyholders after the Sept. 11 terror attacks when capacity had receded in the international markets.
While participation is voluntary, the pool provides a maximum limit of $1.3 billion, which until now was shared among all EC policyholders for all terrorism claims on a “first come, first served” basis, explained BHSI in a statement.
Insurers participating in the pool must charge their EC policyholders a 3 percent levy on policy premiums, which is then remitted to the Hong Kong government, added BHSI. According to the terms of the pool, those participating insurers are not obligated to pay EC terrorism claims to their customers until the pool first pays the insurer for the claims.
Effective Dec. 1, the EC terrorism coverage provided by BHSI is no longer subject to any of the pool’s restrictions. BHSI’s customers are no longer subject to the 3 percent levy on their EC policy premiums. In addition, BHSI policyholders no longer need to share a limit with all the other EC policyholders in Hong Kong and payments for terrorism claims are no longer contingent upon payment or reimbursement from the pool, the company went on to say.
“The feedback from the customers and brokers we have discussed our approach with has been incredibly encouraging,” said Marc Breuil, CEO of BHSI Hong Kong.
BHSI’s EC policies are now backed by its own financial strength, which carries the same S&P rating as the Hong Kong government, said Breuil, noting that the policies provide EC terrorism coverage to policyholders without the obligation to pay the levy.
“We are excited to offer this market-changing coverage development to our current and future EC customers, he continued.
Source: Berkshire Hathaway Specialty Insurance