Andrew Tobin of the Global Insurance Department discusses the turmoil in Turkey, and what it can mean for political violence insurers, in Insurance day.
As the dust begins to settle on what must have been one of the shortest-lived and moat unsuccessful attempted coup d’états in recent history, both all risks and political violence insurers will be taking stock.
On the night of July 15, a faction in the Turkish armed forces, under the alleged leadership of the Peace at Home Council, attempted to seize power from President Erdoğans government by force, in scenes reminiscent of the 1970s. Bridges were blocked and tanks deployed at key locations, including Istanbul's Atatürk airport. Some reports refer to the blocking of social media and other websites.
Turkish law will no doubt govern locally issued Turkish policies, but English and other laws will be relevant to a variety of risks placed in the London market, particularly on global programmes.
Whatever the governing law is, standard property policies worldwide tend to exclude political violence in more or less the same terms developed in the London insurance market and exported globally on the back of reinsurance. For example, NMA 2918 excludes loss or damage "directly or indirectly caused by, resulting from, or in connection with any of the following, regardless of any other cause or event contributing or in any other sequence to the loss:
War, invasion, acts of foreign enemies, hostilities or warlike operations (whether war be declared or not), civil war, rebellion, revolution, insurrection, civil commotion assuming the proportions of a popular uprising, military or usurped power.
Acts of terrorism."
NMA 2918 is an updated version of NMA 364, the London non-marine standard political violence exclusion agreed on after the 1938 bombing of Guernica in the Basque Country. With the exception of terrorism, the words in the exclusions are usually left undefined in standard policies; however, most do have common law meanings, in some cases stretching back centuries.
The meaning of exclusions is relevant not only to all risks insurers but also to political violence insurers, since such policies will exclude all of those political violence perils that have not been specifically purchased. So, for example, a standalone terrorism policy will itself exclude all the other political violence perils, or a policy might cover up to insurrection, but exclude civil war.
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