How to Secure Political Violence Insurance UAE for Protection

You have such high hopes for your enterprise. It’s your dream, your passion, and you live for the satisfaction of making it a success. You give it your all and ask the same of your group. You are focused on delivering the best product or service to your customers and you cannot afford to be distracted by external threats. Especially the deadly and dangerous political threats that reside in every human society, in every country, on every continent.

These evil, terrorist, and malevolent forces will gladly leave you broken, beaten, and insolute. Perhaps worse, they can silence good people like you and your team for fear of unchecked violence. Foiled by the senseless extremism whose only goal is to exult and destroy the innocents.

Understanding Political Risk and Its Impact on UAE Businesses

Political risk is an incredibly complex phenomenon and there are many different types we could explore here. However, one of the most common ways we see political risk manifest is through expropriation, nationalization, or confiscation. When governments expropriate, they take ownership of an asset. Nationalization involves a government taking control of a business or an entire industry.

Confiscation is a forced seizure of an asset by the government. It can also happen that a breach of contract by a government becomes covered under one of these types of loss. It’s not like there’s a category for breach of contract under political risk. however, the result might be the same. Are those circumstances on the increase? It’s hard to say for sure.

Not only do these protocols need to protect the expatriates themselves, but they should provide the environment for maximizing the utilization of their skill set when they are in non permissive environments. So, what exactly is a preventative approach to an issue as specific to context as political violence? And why should the focus not solely be on mitigation but on the transfer and assumption too?

Key Components of Political Violence Insurance UAE Policies

Who needs political violence insurance in the UAE? Not the kind of topic you’d casually discuss with pals over lunch. But let’s face it, we can’t pretend it’s improbable that political violence could hit at any business’ bottom line. In the worst case scenario, political violence might be deliberately aimed at a business. The recent unrest in the region has made many businesses painfully aware of the potential losses they could face.

Terrorism Insurance UAE: A Specialized Focus

But back to the more mundane but potentially just as devastating non malicious product contamination issue. The exposure from the distribution of goods deemed to be contaminated could affect customers transported by a truck or railcar, or via a ship, aircraft, or pipeline. Real or imagined contamination could immediately shut down the general availability of those modes of transportation and/or seaports or airports and even whole city CBDs (central business districts) or shopping malls.

Product recall costs could be substantial, even before you get to discussing potential business interruption or property damage losses. If some begin exposure was scientific rather than politically driven in terms of maximum probable loss (MPL), for example, the potential exposure to a fetus, the company could also face substantial extra expense claims or lawsuits should the company’s legal defense advisors decide to push back in the courts re probable coverage.

Assessing Your Political Risk Exposure

In today’s environment, I’m not sure anyone really knows what tomorrow will bring. If you’re operating across the Middle East, these uncertainties are probably only compounded. That’s why staying one step ahead of the political risks you face is likely to be high on your risk management agenda. Not all risks can be ruled out, but they can be prepared for. Conquering the challenge will require a combination of establishing sightlines to the risks you’re facing, building better control and mitigation mechanisms, and transferring risk where appropriate.

What about due diligence? How effectively can you screen and monitor business partners, suppliers, and the regions in which you operate? What are your firm’s risk management talent, strengths, and insufficiencies? Where’s the potential for overcontrol? Mapping your political risks is a multidisciplinary effort. You’ll need representatives from legal, risk, compliance, strategic planning, and many other areas throughout the company.

Selecting the Right Middle East Political Risk Insurance Provider

It’s great to have an insurance policy, detailing exactly what’s covered, but how is a loss calculated and how long will it take to get paid? Terms and conditions play a key role in answering these questions here’s a look at why they are so important and how they can impact the time it takes to settle a political violence and/or terrorism insurance claim.

Policy Customization and Extensions

Standard political violence insurance applies to the broader risk of politically motivated events. Whether it’s the ever looming threat of terrorism or strikes and riots that can stop work in high risk locations, political violence insurance offers a certain sense of security. However, when organizations are attacked by politically motivated subversive groups or targeted by campaigns of sabotage and business interference from foreign governments or politically affiliated groups, traditional political violence insurance doesn’t fully address the specific strategies and methods of such adversaries.

They leverage pressure points that can cripple a company without even engaging traditional political risk insurance triggers. Loss of confidential information, intellectual property, or trade secrets can be as damaging to an organization as a physical attack or impossibly high demand for ransom. These losses immediately multiply consequences by implicitly inflicting physical and financial harm and crippling business operations. When costs are coupled with an immediate, cascading revenue hit, ongoing liability becomes overwhelming in short order.

The Application and Underwriting Process

These are the options available. And again, the list is far from exhaustive, as political violence insurance policies and programs vary greatly in structure from company to company. But no matter how they are organized, companies must manage their portfolios of insurance policies to ensure that their policy proceeds and limits of liability are optimized across multiple sources of recovery (including terrorism pools and government programs.

For that purpose, a policy must generally be triggered that is, prove that a loss was sustained as a result of a covered event. It must also apply to each loss or a specific series of losses, with the total of all liability incurred not exceeding policy limits. Sometimes, primary coverage for an event is prohibitively expensive, the difficulty of triggering the policy is perceived as great, or because policy proceeds are specifically earmarked to a class of assets and liabilities or to a time period, there are no abatements or only partial coverage.

But in many cases, the policy just provides first loss coverage. In such situations, companies will want to obtain as much reinsurance as possible. In an ideal world, this means reinsurance for 100% of policy proceeds after all abatements and with no restrictions on what claims can be filed.