In war, we're on our own

The Insurance Brokers Association of TT issued, on December 11, a formal release warning that damage or destruction resulting from war would not be covered by general insurance.

According to the association, war losses are "catastrophic and unpredictable, making them difficult to price or insure sustainably."

Those exclusions and general reluctance to issue coverage for war damage roll up through the hierarchy of liability from insurer to reinsurer.

According to Navin Dookeran, an executive board member of the association, individuals can talk to their brokers who can canvass foreign insurance companies to find options for coverage.

But the problem is global, because the difficulty of realistically assessing the sums that might be incurred in war losses and arriving at a cost for premiums that might cover them is universally inconsistent.

Businesses operating in TT over the last 36 years will already know how the specific limitations of insurance can affect their business.

After Yasin Abu Bakr took hostages at TTT, announced a coup of the government and urged citizens not to loot, it's widely believed that his caution was read as an invitation.

The resulting looting and destruction in 1990 cost businesses in Port of Spain more than a billion dollars in lost goods, damaged equipment and fire-gutted properties.

It was an unhappy reflection of the impact of Black Power demonstrations in the city in April 1970 and the resulting state of emergency that chilled commerce in the city for months. Insurance claims were also denied then. After the 1990 coup attempt, two insurance test cases were filed – the Nahous and Grell-Taurel actions – only to confirm that insurers would provide no recompense for losses resulting from conflict.

The consequences of the misadventures of 1970 and 1990 should stand as a sobering reminder of the reality of battle zones and the potential they hold for costly disruptions to TT society.

The unrest of 1970 and 1990 was amplified by an ever increasing calibre of weaponry with concurrent growth in destructive power, but this country has not faced a major military conflict by armed external forces on its shores since Tobago was invaded in 1781 and 1803.

Beyond the immediate risk to life and property posed by increasing tensions between the US and Venezuela, there are potential consequences if TT is identified as a high risk port of call, with attendant increases in insurance costs for cargo shipping and airlift.

After 9/11, the FAA responded to heavy insurance losses by temporarily expanding its Aviation War Risk Program for US carriers after private insurers cancelled their policies.

Bumbershoot, or portmanteau policies, exist to cover specific war risks to commercial shipping.

The reality of insurance during conflict reflects the uncertainties of war itself; it is both costly and unpredictable.