David Guest is War, Terrorism and Political Violence Underwriter at Hiscox
Why did you choose to specialize in this area?
I’ve always been interested in politics and history. I’ve got an inquisitive nature and a real appetite to know more about people and their countries – comes in useful at pub quizzes!
I was originally a marine underwriter at Hiscox, writing a lot of large cargo/infrastructure risks. Then, directly after 9/11, demand for terrorism cover was huge and there were queues around the block at Lloyd’s. That was when I joined the terrorism team at Hiscox.
It turned out to be a good move because political violence and terrorism is as exciting and challenging as insurance gets. Put it this way, my work doesn’t stop the conversation at dinner parties, like the word ‘insurance’ sometimes does.
Do you believe that the world is becoming more dangerous?
At a basic level terrorism is a problem that has been around for a long time. My own desk is within 100 yards of two major acts of terrorism that took place in the early '90s – the St Mary Axe bombing (in 1992) and the Bishopsgate bombing the following year. Those explosions were preceded with warnings from the IRA.
Today, with jihadist extremists for example, their aims and methods are different. So while terrorism has always been with us, the threat is evolving.
In some ways, the low tech approach can still be very successful – look at the recent attack on Mumbai. In other ways, terrorists are becoming more hi-tech and using the internet to inform and coordinate attacks, for example.
There are some very resourceful and enterprising people out there and they will use all the tools at their disposal. It means that the security forces and businesses are often playing catch up when they try to put defences in place.
A new report from Lloyd’s says that labour disputes could cause significant unrest risks. Is the downturn a breeding ground for political violence?
Being poor does not turn people into terrorists. Look at Bin Laden or the terrorists behind the bombing of Glasgow airport. They were not poor; they were all essentially educated and upper/middle class.
But for many people, their economic situation can put their problems under a microscope. Existing hotspots will get hotter and latent civil unrest will be surfaced by the downturn. A recent OECD report notes that unemployment is increasing and a percentage of those unemployed will turn to crime.
It won’t necessarily lead to big terrorist events but the frequency and severity of civil unrest will increase. For businesses that means a heightened threat to supply chains and possible delays to the delivery of goods.
So is terrorism a growth sector for insurers like Hiscox?
We write around 2,000 policies a year and lead on 75% of what we write. It’s been a real growth area for Hiscox and Lloyd’s as a whole.
That growth in demand is being driven by the higher profile of acts of political violence – clients are more aware of the threats facing them. Plus, businesses are realising they have a duty of care to staff, customers and shareholders.
Also, when times are good an event can have a serious impact on a business’s balance sheet. When times are tough economically the impact can be disastrous.
From an insurance point of view at least, terrorism risk usually relates to property. Is liability an issue where employees and customers are killed or injured?
Following the 1993 attack on the World Trade Centre the owner [the Port Authority of New York & New Jersey], was deemed by a US court to have been 68% liable on the basis that they had chosen to ignore ‘an extreme and potentially catastrophic vulnerability’ that had been identified through security advice.
The terrorists bore only 32% of the responsibility! Businesses can no longer use the defence that an event was unforeseeable. Anyway, I think that more companies are coming around to the idea that their greatest resource is their staff and they want to protect them as well they do their bricks and mortar.
We respond to that by offering a basket of coverages that includes personal accident, medical repatriation and kidnap and ransom as well as specific terrorism property damage and liability policies and risk management advice through Control Risks.
So what are the likely targets and methods in your view?
We cover a wide range of industries and the threats are very different. We see an increased frequency of losses suffered by hotels because they are necessarily easy to access. No-one wants to stay in somewhere that looks like Fort Knox.
There are real fears that the Mumbai attacks could be repeated by groups around the world who have seen how effective they were.
We think pipelines around the world are higher risk because it is so difficult to control access to a whole network all the time.
Your job takes you to some risky places? When were you most scared?
I have certainly been to some very ‘interesting’ places but I wouldn’t say that I’ve ever been scared.
I’m careful and I adhere to my team’s underwriting philosophy: be brave but not foolish. Also, like all the Hiscox team members I've had hostile environment training from Control Risks, which makes a big difference to your attitude.
