Political Violence
Energy remains a key industry vertical for the London Political Violence market, and the Lockton Political Violence team have significant experience placing a range of products globally for operational sites and construction projects.
Whilst the London market experienced its first real period of hardening in recent years, the narrative from Treaty reinsurance renewals at 1/1 (when most carriers renew) is trending in a positive direction for the first time since the invasion of Ukraine. Initial indications show markets obtaining reduced premiums and increased aggregate caps for Political Violence and Civil unrest perils, a reversal of prevailing conditions.
This is driven by losses from political violence since 2022 being less onerous than expected but also buoyed by increased enthusiasm for writing this line. Whilst in a hard market casualties would be expected, six new entrants have joined the market in as many months, bringing the total number over 50. This new capacity has levelled out rates for Terrorism and Sabotage renewals, with reductions possible again on a case-by-case basis, and significant increased competition on new business. Wordings have also been broadened following knee-jerk restrictions from markets in response to Ukraine.
Civil Unrest and Political Violence placements remain more of a challenge given continued geopolitical instability worldwide, and there are a limited number of true leaders in this space, although this is being disrupted by new entrants and plenty of follow capacity is available.
Political Violence markets are agnostic as to the stage of the energy production process in their underwriting, although there are a couple of exceptions. Coal remains a challenging occupancy, with most insurers unable to offer coverage for new coal by Lloyd’s regulations: there are a small number of markets who will write it, but they are able to charge accordingly. Pipeline risks, especially those in the littoral, are increasingly scrutinised given attacks on them in recent years.
Traditionally excluded from terrorism and political violence placements, cyber write-backs are becoming more achievable to place, with more insurers willing to consider offering it as an extension to cover property damage resulting from a cyber terrorism incident.
Finally, there is a small but growing market for non-damage business interruption/impairment of access. Given increased levels of non-violent protest, especially social media driven, this product could be of interest to clients, although is more expensive than traditional covers in this space given the broader peril.
Initial indications show markets obtaining reduced premiums and increased aggregate caps for Political Violence and Civil Unrest perils, a reversal of prevailing conditions.