Will Insurers Use War to Profit’

It is often noted that the economy can be impacted by the smallest of things. Going to war with Iraq, however, was not exactly a small thing.

Whether you support the cause or not, I for one do, the trickle down affect didn’t take long to occur. While the stock market varied leading up to and once the war commenced, those in the insurance industry have been keeping a watchful eye to see if prices for cargo shipping in the area, airline traffic, buildings, etc. would skyrocket.

As Insurance Journal international editor Charles Boyle reports in this issue in the news currents section, there are both known and unknown consequences involved with the conflict.

One thing all in the industry will likely agree on is that this conflict opens the door for some insurers to possibly go beyond what is expected and quite frankly, what is reasonable, when it comes to charging for coverages in the area.

Shipping cargo to the region, for those that must, is one area where some will have to open up their wallets. How much of a chance companies will be willing to take, from both a safety and coverage standpoint, remains to be seen. While a number of organizations want to ship food, medical supplies and other humanitarian aid into the region, do they have the resources to pay for what will be sky-high insurance costs?

Just in the last 10 days, a leading Lloyd’s syndicate noted that war insurance premiums have gone beyond doubling for ships visiting Iraqi ports. The insurers reply that major insurers justify the increases by claiming risks were applied according to the assessed risk. Not only do the vessels and planes have to be insured, but the cargo they are carrying also is subject to rate increases.

As of press time, no non-military modes of transportation had suffered any catastrophic losses, but if the war continues for an extended period of time as some think it may, that could quickly change.

In the wake of Sept. 11, the majority of industry players have practiced fair and balanced coverage when it comes to insuring risks. Like any major event, however, the opportunity is there to take advantage of the situation.

Will insurers use the situation in Iraq as an opportunity to do good, clean business? Or will some see it as an opportunity to jack prices and line their accounts?

Take a minute and go to our poll question on the Insurance Journal’s Web site (www.insurancejournal.com) and offer your opinions on the subject.

Few good things come out of war, but liberation of a people and insurers playing by the rules in this time of crisis, would certainly be two of them.

Share your thoughts with us by e-mailing me at dthomas@insurancejournal.com.