The Burma Campaign's report turns the spotlight on insurers, but governments must make a stand too.

International pressure is mounting on insurers after revelations by The Burma Campaign found many companies have indirect links with the Burmese military regime.

The report, Insuring Repression, identified that more than 200 firms had insured multinational companies operating in the country which helps finance the Burmese government.

It exposed how foreign insurers directly and indirectly fund the Burmese regime by underwriting the regime-owned Myanma Insurance. It is an imprisonable offence to buy insurance from any other provider in the country.

Previous reports by the group have had a positive impact on changing the behaviour of some insurers. By July 2007, 13 of the world’s top 30 insurance companies declared they didn’t provide insurance to companies stationed in Burma.

These included giants AIG, Allianz and Willis. But these latest findings cast a shadow over the industry.

A key issue is whether the insurance industry as a whole is prepared to take a stand on doing business with Burma.

One method of making such investment more difficult is imposing sanctions. US sanctions prevented 11 of the top 30 companies providing insurance services to the troubled region last year.

A classic case of diplomatic arm-twisting, economic sanctions are a popular remedy used by the international community when applying pressure to rogue regimes. The criticism often levelled against such punitive action is the effect it has on ordinary citizens.

In this case however it seems a credible option. The report’s figures show that almost half the government’s budget is spent on the military and only 1.4% spent on health and education.

The question is what is the incentive for insurers? Arguably a level playing field with all insurers withdrawing from the Burmese market is one option. A feeling that they are not ‘losing out’ is a credible incentive for any business.

The US and Canada have already implemented legislation to that effect but to date the European Union has not enforced such stringent measures.

The problem with sanctions is where do you draw the line? Setting a precedent by halting trading in one state sets an example to be replicated in other states.

This could lead to difficult decisions for insurers. What level of misdemeanours would render a state exempt from trade?

Collective will is important. Should enough firms take a stand on the issue of Burma then inevitably there will be a greater pressure for others to follow suit, for fear of being the last man standing on a politically sensitive issue.

Ultimately a lot will rest on the action of individual governments and how they regulate the business that flows to and from Burma. If they are prepared to take a strong stance, others may well follow.