economy
Trump says it's not a 'war.' Insurers with money on the line say it is
Businesses in the Middle East bought insurance that protects against terrorism or sabotage, but far fewer purchased coverage explicitly designed to cover "war."
TL;DR
- Many companies in the Middle East have insurance covering terrorism and sabotage but not explicitly war.
- The distinction between war and terrorism is critical for insurance claims, with policies often excluding declared or undeclared conflicts.
- Rising geopolitical risks in the region have led to increased scrutiny of insurance policies by both insurers and businesses.
- Maritime disruptions and land-based strikes are complicating claims under various insurance types, including property, cyber, and marine policies.
- Political rhetoric, such as avoiding the term 'war,' has legal and political implications but may not sway insurance claim decisions, which rely on policy wording and facts.
- Cyber insurance policies often have war exclusions, but proving an attack was state-sponsored or directed by a sovereign government can be difficult due to the use of proxies.
- Marine insurance typically excludes losses tied to warlike operations unless separate war risk coverage is purchased, which itself may have exclusions.
- Some insurers are pausing or restricting new coverage for parts of the Middle East, increasing costs and conditions for remaining policies.
- The primary lesson for businesses is a failure to fully understand and underinsure against geopolitical risks.