The significant risk exposure represented by the increasingly tense stand-off between the US and North Korea has been recognised by a number of clients with operations in North and East Asia which are seeking to transfer a portion of this risk, says Geoffrey Lambrou, CEO, Specialty Broking & Operational Excellence, Asia, at Aon.
In an introduction to the Aon publication, Asia Market Review 2018, Lambrou says that the devastation that would be caused by any conflict between North Korea, the US, and other regional and global powers, raises a very real challenge to the insurance market in terms of the level of risk the insurance market is able to bear. This acute issue of insurability has also raised wider questions around policy wordings.
“We have seen, and can continue to expect to see, underwriters seeking to clarify what is covered under traditional products, so as to prevent losses being picked up which were not intended to be covered but must be paid due to ambiguous policy language. In this environment, the technical ability of the broker and its consultancy skills are paramount. Clients must be cognisant of this change in tack and confident in the advice they are receiving,” Lambrou said.
As a response to the escalating tensions on the Korean Peninsula, Aon says that it has fielded a number of requests from clients regarding their war and terrorism coverage.
A number of clients, particularly foreign organisations operating within South Korea, have sought to expand policy wordings to transfer as much of their risk as possible.
Whilst nuclear war is uninsurable, events such as a North Korean test missile accidentally landing in a populated area, some form of military miscalculation, or minor retaliation following a targeted surgical strike against North Korea would still be counted as an insurable loss.