Managing Political Risks During Uncertain Times

Markel International

Covid-19 has brought significant economic and social challenges globally in 2020. 

Similar to many other parts of the world, people’s livelihoods in Asia have been affected in different ways. Job losses, lack of opportunities, shortage of medical services, deteriorating standards of living, for example, are happening in many countries in Asia Pacific, and all these scenarios have the potential to spark off a political risk event.

In particular, countries that have difficulty recovering from the economic and social effects of the Covid-19 lockdown will be more vulnerable to political uncertainties, as their citizens may be frustrated with the leadership, status quo, or where they think their country is headed towards. 

Governments may also be perceived as not doing enough for its citizens, resulting in increased discontent and triggering protests in some countries. In 2021, we have already seen citizen protests in both India and Indonesia.

Despite all these uncertainties, there is a silver lining as the situation improves. A few Asian countries have fared better during this pandemic and have managed to keep Covid-19 cases relatively contained. Although social distancing measures and travel restrictions still apply in most Asian countries, businesses have gradually resumed their operations, people are adapting between work from home and office, and green lanes are in negotiations to support essential business travel. 

As we look to the post-Covid-19 recovery, we can expect a return to “normal” in the near future. India has managed to secure 600 million doses, and other countries in Asia such as China, Japan, Indonesia, Singapore, South Korea and Thailand have all signed deals for millions of doses. Subject to each country’s approval for domestic use, people are already getting vaccinated; mostly at no cost to the general public in countries like China and Singapore.

Changing Nature of Risks

During these times of uncertainties and challenges, it is important for us, especially in the near-term, to keep abreast of the latest events and be sensitive towards them. 

In particular, social media has made the handling of social unrests very different from the pre-social media era. People can now organise and coordinate much more quickly, and movements have become more fluid. Meanwhile, there are more “leaderless” movements, spreading across more areas, and as a result they become harder to contain. Consequently, political violence and terrorism events have a high chance of becoming viral, so it is important for insurers to be agile and support their clients as quickly as events unfold, preferably in the same time zone. As Asia is a very diversified region, it is also especially important for insurers to understand the cultural nuances, which can have a pronounced impact on each country’s situation.

Evolving Terrorism and Political Violence Market

Though insurance products related to political violence have largely remained the same over the past decade or so, what has changed is that a client’s appetite and awareness have improved in recent years. We have seen rate improvements in locations faced with terrorism, social unrest issues and protests, including in Asia. Capacity in these troubled areas has retreated and therefore rates have finally reflected the changes this market has experienced.

The terrorism insurance market has also increasingly commoditised over the years, and it seems inevitable that terrorism pools evolve as market players explore ways to be more efficient.
With the push for more e-solutions especially under these unprecedented circumstances, big data is becoming more accessible and prevalent, and market players are becoming more sophisticated as they look to reduce costs. As a result, we believe that pools are likely to be even more commonplace in the years to come.

During these times of uncertainties, Markel is liberating our clients from the unknown through our tailored products and covers. As Markel expands our terrorism and political violence book in Asia, we foresee our team in Singapore growing further in the future as Markel continues to seek out new opportunities throughout Asia.

Working together with our counterparts in London, Mumbai and Dubai, Markel is committed to expanding our global political violence presence over the next 5 years, including in Asia, as we see increasing amounts of new prospects presenting themselves to us.


Hui Zhi Pek
Terrorism Underwriter 



ENDS

About Markel International:

Markel International is a division of Markel Group Inc, a US-based holding company trading on the New York Stock Exchange (NYSE: MKL). Markel International writes insurance and reinsurance business through six divisions and through offices across the UK, Europe, Canada, Latin America and Asia Pacific. Markel International’s insuring entities include Syndicate 3000, Markel International Insurance Company Limited, Markel Insurance SE., and Markel Resseguradora do Brasil S.A. Its UK national markets business also provides legal and professional fees insurance cover as well as legal and tax consultancy services.