Business risk consultancy advises underwriters to understand local grievances in terrorism risks
Underwriters must take into account local grievances and globalisation when insuring terrorism risks, warns Control Risk Group's (CRG) policy director John Bray.
Speaking at a seminar held by the Insurance Institute of London, Bray said the impact of the World Trade Centre tragedy meant world events now affect all marine and aviation risks.
"Afghanistan is no longer out there," he said. "What happens in previously distant places affects us here."
Bray said although the war against terrorism appeared to be "extremely effective", insurers must be vigilant. He advised insurers and reinsurers to consider what inspiration terrorist groups might have.
"You must think about local grievances and the winners and losers of globalisation," he said. "Ideology plays an important role."
Bray said organisations would not necessarily be large groups, but could be smaller entities or even individuals.
"Do not expect the scenario [World Trade Centre] to be repeated," he said. "Expect the unexpected and look for something else."
Bray said sources of tension include areas such as Yemen, Somalia, Iraq, Israel, Palestine, Kashmir, Sri Lanka and the Southern Philippines.
He also told brokers and underwriters it is now more important than ever to provide a balanced assessment of the risks, rather than minimize or exaggerate them.
CRG associate director of crisis and security management Mike Hitchcock added: "This [war] is going to go on for one to three years. Normality is not on offer, we are in a new normality."
He said the insurance industry was also at risk of money laundering and advised insurers and intermediaries to "know your customer".
