Pool Re warns said ISIS fighters returning to Britain from warzones in Syria and Iraq will seek to carry out a mass- casualty chemical or radiological "dirty bomb" attack, possibly using a drone.
"Daesh (ISIS) has developed a significant chemical weapons capability in Syria and Iraq," the report quoted in The Sunday Times said.
"Reports also indicate that the group has been conducting research into radiological dispersion devices (RDDs or 'dirty bombs') in Mosul, Iraq. As more fighters return home, there is a growing risk of a technology transfer from current attack methods in the Middle East to future attack methods in the UK," the report said.
The company, set up with Treasury support in 1993 following the IRA bombing of the City's Baltic Exchange the previous year, is also working on a report assessing the risk and insurance costs of a drone-based terrorist attack on the UK.
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The report warns that ISIS is "investing significant resources into enhancing this (chemical attack) capability".
"The psychological impact of these weapons systems have the potential to cause widespread panic and significant economic impact," it says.
They also fear such materials could be smuggled into smaller ports on the UK coast where security is less stringent.
On Friday, Europol, the EU-wide police agency, warned that ISIS would step up overseas attacks as it came under pressure in its self-declared "caliphate".
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