As indicated last week I will dedicate a few articles to share some lessons from the 42nd African Insurance Organization (AIO) Conference and General Assembly that  was held in the Tunisian Capital, Tunis.
The first session looked at the topic “The increasing Frequency of Political Violence in Africa and its involvement for the Insurance Industry”
Before delving into the details on Political Violence I would like underscore a timely statement by one of the captains of the industry
Mr Junior John Ngulube, the Chief Executive Office for Munich Re South Africa who in one of the sessions said “To insure is to understand”.
I like this statement because usually as insurers we are tempted to think within the paradigm of written rules and seldom think outside the box. We tend to exclude what we do not understand in our policies rather than seek understanding and come up with solutions.
In this dynamic world insurers must continuously come up with products that respond to the ever changing needs of customers.
We need to move away from the ‘one-size-fits-all’ to bespoke policies or products that reflect specific or unique situations and needs.
In order to develop such products we must understand these situations.
We need to engage experts in those fields and then think from an insurer’s point of view to come up with solutions that will provide coverage to the unfortunate events that may arise therefrom.
Back to Political Violence. What is covered under this type of insurance?
Firstly I must state that in most treaty policies obtaining in our market political risks are excluded under the standard exclusions known as Strike, Civil War, Civil Commotion (SRCC).
Political Violence insurance covers these risks including Terrorism, Sabotage, Malicious damage, Insurrection, Rebellion, Mutiny, Coup
d’état usually arranged on facultative basis.
There is an important aspect of coverage that I will share at this point.
A foreign investor operating in a foreign country may obtain cover say against Government’s confiscation of his property due to political reasons but a local investor cannot generally get such insurance cover under Political Violence.
The reason is that the government is ultimately expected to protect its citizens and hence such coverage will be against this rationale.
In later articles I will give definitions of all these perils from different market wordings.
It is however very important for the insured to understand what is covered and what is not covered.
There are many examples in real life where this coverage has been helpful such as the Westgate Mall in Kenya.
Most of us may remember the three days terror attack at the shopping mall that left several people dead and property damaged.
The owner of the mall had insurance cover and was able to successfully claim about US$150 million from his insurers.
This was revealed by Mr Mohammed Kotb, Regional Managing Director Middle East UIB London at the AIO who cited that experience as a classic example of Political Violence in Africa.
This level of compensation is testimony to what this cover can do. Mr Kotb also cited the evolution across the Arab world that saw some
continued political unrest in that region. He used the Egyptian experience as a case study.
What was covered in most polices was Strikes, Riots, Civil Commotion, Burglary, Theft and Malicious Damage.
There were of course a number of exclusions which led to some considerable negotiations between parties involved.
Although reinsurers ultimately agreed to pay millions of dollars they did not admit liability and a number of lessons can be drawn from this case such as the need for clarity in what is covered and excluded.
Also the need to have a strong local body that speaks for the industry.
I also thought I could share the availability of capacity for Political Violence coverage as learned from the AIO session. A total of US$2.5 billion is available in the market with about US$1.5 obtainable from Lloyds of London.
In some countries there are government pools that offer assistance or insure terrorism for instance UK-Pool Re, India-MTRIP, Germany
Extremas, Spain-Concorcio, Autralia ATIA, France-Gareat, Denmark-DTIS, USA-Tria.
It is important to have regional pools or even country pools to provide capacity. Africa cannot rise without peace and security as calls from insurance leaders came for a terrorism pool to protect Sub Saharan African assets.
I also learnt from the sessions that 58 per cent of countries exposed to political unrest are in Africa and 2014 was characterized by wide
unrest and violence across the globe with fatalities up to 25 per cent, largely driven by Boko Haram and Al-Shabaab in Africa and IS in Iraq and Syria.
Africa is still the most exposed continent in the world in Political Violence.
Comments: webster@picz.co.zm or webster_tj@hotmail.com or on face book search for Insurance Talk-Zambia page or call/text 0977 857 055  The Author is a Chartered Insurer with more than 10 years industry experience