Terrorism & War Risk Insurance

The need for terrorism coverage has started to gain attention since the harrowing 9/11 attack on New York’s World Trade Centre. The number of conflicts worldwide, too, has not been letting up.

In 2016 alone, there have been massacres in Brussels, New York City, Istanbul, Baghdad, Lebanon, Bangkok, Nice and more that rocked the world. Armed conflicts continue to plague countries such as Syria, Iraq, Afghanistan and Saudi Arabia.

It is, therefore, no surprise that 72% of business decision-makers surveyed in Travel Risk Map 2017 believes that travel risks have increased and 71% agree that potential terror attacks globally is their greatest concern. A majority of them expect the risks to be on the rise.

Insurers’ take on acts of terrorism and war

Terrorism refers to any criminal act, committed for political, religious, ideological or similar purposes, that endangers the public’s safety. War-related events include invasion, rebellion, revolution, insurrection and military coup.

These incidents often result in high casualties who are either severely injured or dead. In the face of hundreds, thousands or even millions of exorbitant claims, insurers will suffer such great losses that they may not stay solvent.

That is why terrorism and war are usually excluded in regular insurance plans and are only offered as add-ons. However, in recent times, some insurers have begun to include partial coverage in international health insurance plans in the interests of mobile expats, who have more exposure to such security risks.

Questions you have to ask

As attractive as it sounds, such a clause that requires insurers to take high risks does not come without conditions attached. Insurers typically protect themselves and make sure they are able to compensate within their means by setting specific parameters. This varies across different companies.

Here are some possible restrictions:

• Type of weapon
  • Firearms
  • Nuclear
  • Chemical
  • Biological
• Type of involvement
  • Direct
  • Indirect
• Type of act
  • Being kidnapped, held hostage or demanded of ransom
  • Hijacking
• Type of coverage
  • Medical expenses
  • Death pay-out
  • Emergency evacuation
  • Material losses
  • Disability
  • Worker injury

Take note that terrorism and war may be treated separately. Some insurers cover both categories, while some sell them separately or simply choose not to cover one of them.

Additionally, policyholders who travel against official advisory warnings may have to take responsibility for their own safety and waive their rights to the benefits. Be sure to check the fine prints.

Selected few host countries and/or policyholders’ industries may also be excluded from cover.