Group life insurers are jointly working with reinsurance companies in a variety of innovative ways in an attempt to boost their catastrophe cover limits.

Industry sources say that after 9/11 terror attacks, insurers and reinsurers have become aware of the potential for multiple person deaths from a single event. Most have therefore introduced catastrophe limits on group life insurance policies to restrict the amount recoverable from one event. Reports show that the limit is typically £100m, which is normally applied to individual postcode areas.

According to reports, AEGON Scottish Equitable recently announced that it has redefined its catastrophe limits for group life schemes by looking at concentration of risk by building rather than by postcode. The provider said it is using its sister company, Transamerica Re, to cover the extra risk that cannot be reinsured by its existing UK-based group life reinsurers.

Simon Bailey, employee benefits head of marketing at AEGON Scottish Equitable, said: “By offering clients up to £100m of cover within a single building rather than postcode, we can free up significant capacity. The benefits we can bring to the UK market through our links with the wider AEGON group should really make a difference in a market that is crying out for additional cover.”

Meanwhile, Bupa told Health Insurance that by using reinsurers in an “innovative way” it has been able to provide up to £300m worth of cover for single buildings.