WTW’s Laura Burns discusses policies that insure losses caused by geopolitical crises not covered by traditional insurance.
Companies including McDonalds and ExxonMobil have reported billions in losses from shutting down business and other events related to Russia’s war in Ukraine. Some of that financial pain may have been avoided if corporates had purchased political risk insurance long before the crisis started, according to Laura Burns, who heads the political risk practice for WTW, formerly known as Willis Towers Watson.
- In a video you can watch by hitting the play button below, Ms. Burns explains the benefits of political risk insurance, which covers specific exposures—excluded from traditional property insurance policies—that arise from investment or trade involving other nations.
- “Political risk insurance picks up where other coverages drop off,” Ms. Burns explains. “It provides coverage for the types of perils which [corporates] wouldn’t be afforded with the rest of their property casualty insurance program.” WTW is a broker and advisor for coverage including political risk insurance.
Don’t wait until it’s on the front page. The topic, no surprise, is generating increased interest among risk managers as the war in Ukraine enters its seventh month and amid escalating US tensions with China over Taiwan and other issues. In the video, Ms. Burns discusses soaring rates for coverage related to Taiwan—underscoring the need for corporates to consider buying political risk insurance before there’s a clear and present danger.
- Corporates that follow developments in a country and try to “time the market” may end up waiting to buy insurance “until the window has closed and it is unattainable,” Ms. Burns said, citing Ukraine and other crises.
- “Our recommendation to multinational organizations is to think a couple chess moves ahead and to take out the insurance before you may think you even need it,” she said. “Once it’s on the front page of the Wall Street Journal, it’s essentially too late.”
- And stay tuned: In the weeks ahead, we’ll bring you our full conversation with Ms. Burns on NeuGroup’s Strategic Finance Lab podcast, available on Apple or Spotify.