Jonathan Rae (pictured), executive director in Gallagher’s crisis management team, has spent 12 years at the firm following a background in security and intelligence. In a conversation with Insurance Business, he explored how terrorism risks are shifting, and why insurance must evolve in lockstep.
One of the most significant changes Rae identifies is the move from structured terrorist groups, like the IRA, to isolated, self-radicalised individuals. “The IRA was hierarchical and military by design,” Rae said. “Now it’s completely nebulous.”
Technology, particularly unsupervised internet access, has accelerated that shift. “By age 11, most children have access to smartphones. If they’re not properly supervised, they can be exposed to violent content and become disillusioned or radicalised.”
This digital pathway removes many of the earlier barriers to radicalisation, creating risks that are harder to anticipate and interrupt.
Despite the unpredictability, Rae said current policies still draw “a fairly strong barrier” between terrorism and conventional crime. The key element is motive: political, ideological, or religious intent.
But defining terrorism remains thorny. “Even in academia, the old adage applies: one man’s terrorist is another man’s freedom fighter,” he said. Political violence, especially, exists in a grey zone.
Rae points to the UK’s recent classification of Palestine Action as a terrorist organisation. Previously, its activities - smashing windows, spray-painting buildings - were treated as vandalism, and covered under standard property policies. Now, insurers are starting to class such acts as terrorism. That reclassification may extend to other activist groups whose actions meet the broad definition of political violence: politically motivated, disruptive, and damaging.
Rae said that while brokers like himself focus on client strategy, underwriters and reinsurers increasingly rely on technology to manage unpredictability. That includes geocoding client assets and applying disaster scenarios to estimate exposure across dense urban zones.
“Even a benign-looking business might sit next to a courthouse or an embassy,” he said. “Insurers overlay risk data, simulate events - like a one-ton TNT truck bomb - and assess how losses could accumulate across their book.”
This modelling ensures insurers stay within their risk appetites while pricing for low-frequency but high-impact scenarios.
Rae is clear: “Pool Re is absolutely still fit for purpose.” Created in 1993 following the IRA’s bombing of Bishopsgate, the government-backed backstop was designed to fill a gap left by the exclusion of terrorism cover by the UK property insurance market.
Since then, Rae said, Pool Re has had to adapt to the modern terrorism threat environment. Key changes include covering non-damage denial of access, a move prompted by public backlash after the 2017 Borough Market attack, when some clients discovered their policies didn’t respond as expected. The private insurance market has also returned over the past 30 years, and Rae advised: “There’s now a well-established insurance offering available to UK clients through specialist terrorism brokers as an alternative to Pool Re,” he said.
He notes that Pool Re is now focused on helping SMEs, who are the least likely to purchase terrorism cover. Discussions are underway about providing discounted or even free terrorism coverage to smaller businesses, though Rae acknowledges those talks are complex and ongoing.
Looking ahead, Rae sees liability as the biggest emerging risk for insurers. He points to Martyn’s Law, which will require venues with over 200 attendees to bolster their preparedness for terror incidents.
“Terrorism liability for both employees and the public currently sits within general liability policies, often as silent or sublimited cover,” Rae said. “But with Martyn’s Law and increasing incidents, I expect insurers will start reviewing their exposure.”
That could mean reducing coverage or raising premiums for high-risk venues, unless clients demonstrate that they’ve invested in risk mitigation, training, and crisis response.
Ultimately, Rae argues, insurance is only one part of the solution. Brokers increasingly help clients look beyond policy terms, toward crisis planning, compliance, and long-term resilience. “Security strategy, crisis response, compliance with Martyn’s Law, these all help reduce premiums and make clients more resilient,” said Rae.
As threats evolve, the insurance industry must balance technical accuracy with practical support. Policies will need to keep pace with shifting definitions, digital radicalisation, and regulatory changes. And brokers will play a crucial role in helping clients navigate an increasingly complex risk landscape.
