With the nature of 21st-century war and terrorism ever changing, the need for businesses in the transport sector to protect themselves against attack has never been greater. Recent terror attacks have highlighted the vulnerability of the world’s transport systems, as Richard Close-Smith, Executive Director of Willis, explains:
“For terrorists, publicity is like oxygen, and there is no easier way to get that publicity than to target transportation systems. We’ve seen it recently: 9/11 - aircraft; Madrid - trains and more recently, the bombings of the underground and bus systems in London.”
Speaking in a new video for lloyds.com on the marine and aviation sector, Close-Smith says war and terrorism have always been notoriously difficult areas of risk for insurers to assess, because no two terrorist incidents are the same. With its collective appetitive for risk, Lloyd’s has become one of the few markets that will insure against war and terrorism. Bruce Carman, War Underwriter, Atrium, says:
“It is not possible to model war and terrorism insurance and this is what deters most people from the class. By contrast, Lloyd’s underwriters have a ‘can-do’ mentality. This is where we try to understand the risks associated with our clients and tailor a product to suit.”
Today Lloyd’s underwriters routinely provide physical damage coverage for aircraft worth over $200m and liability limits as much as $2bn. Atrium itself provides war and terrorism coverage for the marine and aviation sectors, although Carman believes ‘war insurance’ to be a loose description.
“There are many other perils in the policy, including malicious damage, strikes, riots, civil commotions, sabotage and confiscation. It is these perils that normally incur the losses and not war itself.”
Carman believes the aviation sector will continue to be the “trophy target” for terrorists, although countermeasures at airports and airlines can be vital.
“Lloyd’s continues to offer the world’s aircraft operators with innovative risk-transfer solutions, even in areas of intense fighting. We are currently insuring the UN operating in war-torn countries, together with NGOs.”
The Lloyd’s video highlights the changing threats in the marine sector, with attacks on gas carriers a real concern, but also shows how developments in the transportation of goods may introduce new risks.
Close-Smith explains: “Containerisation was great progress, and it cut down on pilferage, it speeded up the transport of containers, but it has one disadvantage, and that is that one can never be certain what is in the container, and so that produces potential opportunities for terrorists.”
Despite the changing nature of war and terrorism, one constant is that Lloyd’s will remain as the centre of excellence for dealing with these specialist perils. Carman says:
“This is a niche class of insurance, developed by Lloyd’s underwriters, in order to fill the gap left by exclusions in the standard policies. It is the real appetite for risk that differentiates Lloyd’s underwriters.”
