NU Online News Service, Feb. 22, 2:45 p.m. EST
The turmoil in the Middle East has heightened the interest in political risk coverage as the unrest in that region has increased concerns regarding whether multi-national commercial accounts are adequately covered, an insurance broker said.
While the upheaval in Egypt appears to be quieting down, fighting in Libya and growing unrest throughout the Mideast has made many multi-national clients question whether they have adequate coverage in the face of a political event.
“It’s a wave now,” said Evan Freely, trade credit practice leader for insurance broker Marsh. “I think, just like every other peril that has been rediscovered in the last couple of years—credit risk after the sub-prime crisis for instance—all of a sudden people are discovering political risk. We are getting a lot of calls, a lot of reviews, asking to review their risk to see how much it will cost.
“It takes a while to develop a political risk application for the market because you have to get investment values, property values and schedules,” he said. “I expect, now, we are starting to get the flood of quick looks; then we’ll start seeing the more detailed applications flowing in.”
Mr. Freely added, “I don’t think this is something that is going to fade away anytime soon.
There have been some political violence claims stemming from the weeks of unrest in Egypt that led to the ouster of the nation’s President Hosni Mubarak. But Mr. Freely said it could be another week before there is a clear understanding of the extent of the claims.
In Libya, reports say that the nation’s strongman, Col. Moammar Gadhafi, is losing his grip on power as elements of the government defect to the growing revolt against his more than 40-year rule. Security forces loyal to him have been shooting indiscriminately at protestors, according to Human Rights Watch. As many as 63 people have been killed, but there are indications that the number could be much higher.
For multi-national businesses in the country, the political risk exposure will be primarily for oil and gas interests, said Mr. Freely. The business interests are dominated by Europe, he noted, with only a few U.S. companies in the region.
He said that in Bahrain, meanwhile, the political risk exposure is payment obligations, which have not been affected.
In Bahrain, the majority Shiite Muslims have been protesting the rule of the minority Sunni Royal family that has governed the nation for decades. A severe crackdown just last week by the government has given way to peaceful protests there.
Mr. Freely said that despite all the upheaval, the political risk market is not suffering any anxiety yet, but insurers are closely examining their exposures.
“Some see this as an opportunity [for clients] to see to their political risk and make sure they understand their exposure here,” Mr. Feely observed.
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