‘Political Risk’ to be covered
Reinsurance firm offers coverage for
terrorism, sabotage, and war
Reinsurance brokerage firm Chedid Re has launched a ‘Political Risk Coverage’ insurance policy. This is the first such policy in Lebanon. Insurance companies have been increasingly demanding this kind of coverage in light of the security instability.
The new line covers several accidents not acknowledged in regular insurance policies. It offers coverage against ‘Acts of Terrorism’. Terrorist acts are identified as any unlawful act involving the use of violence against one person or a group of people with the intention to influence any government, and/or intimidate the public.
“The demand on these kinds of policies which cover very particular cases, is not stable,” said Assaad Mirza, President of Lebanese Insurance Association ACAL, and chairman of Capital Insurance. He said that the demand on this line is linked to the situation: “Demand is high when political and economic conditions are critical, however it decreases once the situation improves.”
The insurance also covers ‘Sabotage’, identified as any willful physical damage or destruction perpetrated for political reasons by known or unknown persons. It also offers coverage against ‘War on Land’, including contest by force between two or more sovereign nations, armed conflict of sovereign powers and/or declared or undeclared and open hostilities between sovereign nations. However, the policy excludes certain incidents such as damages arising, from nuclear incidents, and damages caused in cases of confiscation, nationalization, expropriation, or detention.
Mirza said traders and corporations are mainly interested in such insurance line. The cost of the policy varies with the services requested, the location, and the size of the company covered. “If the company asking for such coverage is located in a volatile area, like Beirut’s Down Town for example, insurance fees are definitely higher than those charged on a company located on a safer venue,” said Mirza.
Chedid Re was established in Cyprus in 1998. It relocated its head office into Lebanon in 2004. The company has offices in Limassol, Dubai, and Riyadh.
Reported by Rana Freifer
Date Posted: Sep 05, 2012