The past year has witnessed a flurry of geopolitical upheavals. In addition to increased tension in several hotspots, from the Far East to Ghana’s own regional backyard, the world keeps waking up to new outbreaks of violence and combat: Afghanistan; Myanmar; Ukraine; Ethiopia; Central African Republic; Burkina Faso…
What lessons can be learned in this season of instability, coming in the wake of an unprecedented global pandemic? To best position a business for survival in this time, it is necessary to understand how these issues feed into assessments of risk and coverage.
1. Non-localized effects.
Distance from direct combat is often not enough to insulate a business from the physical effects of conflict, much less the financial. Disruptions in logistics, utilities, agriculture and medicine are directly felt over an entire region, causing untold hardship and frustrating efforts to keep things going. The war in Ukraine, in part as a result of global sanctions against Russia, has had a pronounced effect on industries ranging from satellite communications, to grocery product manufacturing. Even the guarantee of peace in your country of operations does not eliminate the need for a resilient approach.
2. Increased cost of business
Everything that would normally be covered by insurance is amplified in times of insecurity. Natural disasters, operational hazards, and medical emergencies are made more destructive by interaction with situations of conflict. However, even normal operations must be considered differently in theatres of war. For example, insurance premiums for aviation and shipping have dramatically increased for all operations in the Black Sea. Similarly, the compounded impact of instability in Somalia has proved challenging for insurers of freight traffic in that vital transport lane. In such times, it becomes very necessary to take a long-term view regarding the need for coverage.
3. Complications of claims process
Loss assessment is a key step in the claims process, at which point the insurer works with the claimant to confirm and evaluate the situation on the ground. However, in times of war, the insurer has a duty to avoid sending personnel into dangerous conditions. As such, the claims process may be delayed significantly. However, as with the other complications, the right partner can make a world of difference.
Do you need advice regarding your preparedness in uncertain times? Talk to an expert today.