Pool Re was established following a series of terrorist incidents in the early 1990s in London and elsewhere in England related to the situation in Northern Ireland at that time. The cost of these losses caused insurers and reinsurers to consider ceasing to provide terrorism cover for commercial properties because of the high potential cost of losses and the lack of any reliable method of estimating what the future loss experience might be. Insurers depend on reinsurers for financial protection when very large claims occur and, accordingly, both insurers and reinsurers decided they could no longer provide terrorism cover using traditional methods. A withdrawal of terrorism insurance that left areas of business unprotected would potentially have had serious consequences for the UK economy. It became necessary, therefore, to devise a new mechanism for providing this type of cover, without leaving insurers or reinsurers open to substantial losses for which there was no reliable method of calculating accurate premiums.