Riscos para a Cobertura de Terrorismo (Napooleon Montes-Amaya)

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Apresentação realizada no 5º Encontro de Resseguro do Rio de Janeiro (abr/2016)

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Riscos para a Cobertura de Terrorismo (Napooleon Montes-Amaya)

  1. 1. Political Violence (re)insurance When hosting the Olympic Games is fun but not a game Napoleón Montes-Amaya Vice President Specialty Lines Hiscox MGA
  2. 2. About Hiscox Olympic Games History Products available Relevant facts for Brazilian market New terrorism law in Brazil Cover for construction risks in Brazil NCBR Cover Terrorism liabilities case study: Mumbai Conclusion Questions Agenda 2
  3. 3. Hiscox About us • Origins dating back to 1901 at Lloyd’s • Hiscox is an international specialist insurer and reinsurer with a reputation for integrity and quality • We are not a mass producer of insurance policies, we target specific types of (re)insurance, in which we develop expertise, often focusing on areas other (re)insurers find too complex to cover • Hiscox Syndicate 33 has an A (Excellent) Syndicate rating from A.M. Best. It also benefits from Lloyd's own ratings, A (excellent) from A.M. Best, A+ (Strong) from Standard & Poor's and A+ (Strong) from Fitch. 3
  4. 4. Hiscox About us 4 USA Atlanta Chicago Dallas Los Angeles New York City San Francisco White Plains Guernsey St Peter Port Latin American gateway Miami Bermuda Hamilton Europe Amsterdam Bordeaux Brussels Cologne Dublin Hamburg Lisbon Lyon Madrid Munich Paris UK Birmingham Colchester Glasgow Leeds London Maidenhead Manchester York Asia Bangkok Singapore Lloyd’s Brazil Rio de Janeiro
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  6. 6. Risk Misconception “In Brazil we don’t have those problems…” • World’s capital for 16 days, plus the days prior to the event – 4.7 billion people –i.e. 70% of the world’s population- watched the Beijing Olympics in 20081 • Internal issues on the global spotlight • Host nation inherits the world’s problems 1 http://www.guinnessworldrecords.com/world-records/largest-tv-audience-for-an-olympic-games/
  7. 7. Mexico 1968 Tlatelolco Massacre 7 • October 2nd, 1968- Student protest ends up in bloodshed 10 days before the Olympic Games’ inauguration • Students were protesting against police brutality and demanding the establishment of a “truly democratic state” • The students wanted to harness the attention focused on Mexico City at that moment in time
  8. 8. Mexico 1968 Tlatelolco Massacre • “No queremos olimpiadas, queremos revolución!1 8 1 http://www.blackstudies.ucsb.edu/1968/mexico_photos.html Source: http://www.adnpolitico.com/noticias/2012/09/29/tlatelolco-segun-los-periodicos-del-3-de-octubre-de-1968 Source: http://blogs.walkerart.org/design/files/2014/02/Wyman_StadiumSculpture.jpg Source: https://en.wikipedia.org/wiki/Mexico_68#/media/File:Ex%C3%A8rcit_al_Z%C3%B3calo-28_d%27agost.jpg
  9. 9. Munich 1972 Black September 9 • Early on September 5th 1972, a group of Palestinian terrorists storms the Olympic Village apartment of the Israeli athletes, killing two and taking nine others hostage • The terrorists were part of a group known as Black September, in return for the release of the hostages, they demanded that Israel release over 230 Arab prisoners being held in Israeli jails and two German terrorists • In the end, all 9 of the Israeli athletes that were taken hostage were killed at the Munich airport
  10. 10. Munich 1972 Black September 10 Source: http://www2.needham.k12.ma.us/nhs/cur/Baker_00/03-04/Baker_JS_BK_3-04/berlin_munich_olympics.htm
  11. 11. Atlanta 1996 Centennial Olympic Park Bombing 111 Source: http://www.cnn.com/2013/09/18/us/olympic-park-bombing-fast-facts/ • July 27, 1996- Eric Robert Rudolph placed a 40-pound pipe bomb, filled with nails and screws, in Atlanta’s Centennial Olympic Park killing one person and injuring 1111 • In an 11-page statement Rudolph blames the violence on the legalization of abortion and denies that he is an anarchist1
  12. 12. Atlanta 1996 Centennial Olympic Park Bombing 12Source: http://content.time.com/time/specials/packages/article/0,28804,1882967_1882966_1882952,00.html
  13. 13. Confederations Cup 2013 Brazil Protests 13 Source: http://www.usatoday.com/story/sports/soccer/2013/06/27/protester-confirmed-dead-at-confederations-cup/2464583/ Source: http://www.thehardtackle.com/2013/confederations-cup-2013-brazil-on-and-off-the-field/
  14. 14. So what? • Mexico and Atlanta: two domestic issues stole the spotlight • Munich: a global/foreign affair became domestic for Germany • Current situation:  Political turmoil locally  ISIS 14
  15. 15. Gordon Woo’s theory RMS’ Analysis on Terrorist social networks Cell Size 1 2 3 4 5 6 7 8 9 10 Interdiction Probability 0.26 0.46 0.60 0.70 0.78 0.84 0.88 0.91 0.93 0.95 15 Source: http://forms2.rms.com/rs/729-DJX-565/images/TerrorismModelingPrinciples_Charlie_Hebdo_Gordon_Woo_RMS.pdf - Gordon Woo: catastrophist and terrorism expert at RMS - 2010 Results - Osama bin Laden’s message: “For a large operation against the U.S., pick a number of brothers not to exceed ten.”
  16. 16. Products Available 16
  17. 17. Hiscox WTPV • Sabotage and Terrorism: LM3030/T3 • Riots, Strikes, Civil Commotion and Malicious Damage: LMA3092, LPO437 • War, Civil War, Insurrection, Revolution, Rebellion, Coup d'état, Mutiny: Hiscox WTPV wording, LSW 667 (standalone) • Terrorism Liabilities: Hiscox Terrorism liabilities wording/T3L • Nuclear, Chemical, Biological and Radiological (NCBR)  SRCC Extension • Extensions available:  Business Interruption  Extra Expense  Rental Income
  18. 18. Relevant facts for the Brazilian Market Sabotage and Terrorism • No government certification is required, if an event satisfies our definition, then it is covered  MST- Marxist origins with an established political agenda • If the police or military forces get involved during a riot, definition does not change 18
  19. 19. New Terrorism Law in Brazil Proposed definitions as of March 21st, 2016 • Motivação “Prática por um ou mais indivíduos dos atos previstos neste artigo, por razões de xenofobia, discriminação ou preconceito de raça, cor, etnia e religião, quando cometidos com a finalidade de provocar terror social ou generalizado, expondo a perigo pessoa, patrimônio, a paz pública ou a incolumidade pública.” • Atos “Usar ou ameaçar usar, transportar, guardar, portar ou trazer consigo explosivos, gases tóxicos, venenos, conteúdos biológicos, químicos, nucleares ou outros meios capazes de causar danos ou promover destruição em massa” e “sabotar o funcionamento ou apoderar-se, com violência, grave ameaça a pessoa ou servindo-se de mecanismos cibernéticos, do controle total ou parcial, ainda que de modo temporário, de meio de comunicação ou de transporte, de portos, aeroportos, estações ferroviárias ou rodoviárias, hospitais, casas de saúde, escolas, estádios esportivos, instalações públicas ou locais onde funcionem serviços públicos essenciais, instalações de geração ou transmissão de energia, instalações militares, instalações de exploração, refino e processamento de petróleo e gás e instituições bancárias e sua rede de atendimento” ou “atentar contra a vida ou a integridade física de pessoa”. 19Source: https://www.nexojornal.com.br/expresso/2016/03/21/O-que-%C3%A9-e-o-que-n%C3%A3o-%C3%A9-terrorismo-segundo-a-lei-sancionada-por-Dilma
  20. 20. Construction risks Standard endorsement vs. Standalone wording • The endorsement only covers against riots, strikes and civil commotion (SRCC) • LMA3092 covers against SRCC+ sabotage, terrorism and malicious damage • The endorsement does not define perils • Ambiguity in exclusion 2b: “2. This insurance shall not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely […] b) mutiny, civil commotion assuming the proportion of or amounting to a popular rising, military rising, insurrection, rebellion, revolution, military or usurped power […] 20
  21. 21. Nuclear, Chemical, Biological and Radiological What’s covered? 21 • Market standard definition of terrorism • What’s covered:  Clean up, demolition and/or reinstatement costs  Blast damage: partial or total loss  Increased cost of construction  Time Element: net income and extra expense • Exclusions:  A nuclear installation from which or at which nuclear or radiological material is released or dispersed
  22. 22. Nuclear, Chemical, Biological and Radiological 22Source: http://bgr.com/2016/03/28/brussels-attack-dirty-bomb/ • Possible Scenario:  Dirty Bomb – Several reports indicating ISIS have enough radioactive material to build a dirty-bomb – The brothers who attacked the airport and metro station in Brussels last month had planted surveillance equipment outside the home of a nuclear physicist • Who’s buying?  Multinationals and companies in the US and Europe  Companies with exposure around NYC and Washington D.C.  Large event organizers such as the Olympics or the Republican Party convention
  23. 23. Terrorism Liabilities Mumbai 2008 • November 26, 2008: several terrorist unleashed coordinated terrorist attacks across Mumbai • One of the targets was the Taj Mahal Palace and Tower Hotel • 172 people were killed in the attacks, and several others were injured • Will Pike, British citizen, guest at the hotel 23 Source: http://www.pbs.org/wnet/secrets/mumbai-massacre-background-information/502/
  24. 24. Terrorism Liabilities Mumbai 2008- Will Pike’s case in London • In 2013 Mr. Pike put a lawsuit against the owners of the Taj Hotel –i.e. Tata Group, in the UK, where the group has financial interests • Mr. Pike said: "I do not see why the British taxpayer should have to pay for the lifelong care I need rather than those who I believe did not do enough to guarantee my safety.” • Mr. Pike’s lawyer Russell Levy, of Leigh Day & Co. said: “This case is about a failure by the hotel to protect its residents and the negligence of management in failing to institute appropriate and effective security measures to prevent terrorists from entering the hotel despite warnings of an impending attack, or to put in place proper procedures to evacuate guests and staff safely.” • High Court ruling on December 2013: “My estimation is that the time this case would take to reach the probable end in India is some 20 years... about 15 years in high court, plus five years on first appeal […][Mr. Pike] is a man who is not quite 34 years of age. A favorable decision in England would give him the money substantially to improve his standard of living and enable him to better come to terms with his disability when he is about 36 years of age. If the proceedings have to be brought in India then he would be something like 50 to 55 years of age before that occurs” • On January 20th, 2016 David Standard, media relations manager at Leigh Day & Co. reported: "The High Court rejected the Indian Hotel Company's argument that the English Courts did not have jurisdiction to try the claim. Subsequently, the case was concluded. We are unable to provide any further information." 24 Source: http://www.bbc.com/news/uk-england-london-25193461 Source: http://www.standard.co.uk/news/london/man-crippled-for-life-in-mumbai-terror-hotel-plunge-sues-owners-7603308.html Source: http://www.hindustantimes.com/india/uk-man-injured-in-2008-mumbai-attacks-wins-right-to-sue-taj-hotel/story-Ep1evyqWyGPVtuo5QoYbEI.html Source: http://www.mumbaimirror.com/mumbai/cover-story/Brit-paralysed-in-Taj-attacks-wins-undisclosed-sum/articleshow/50661187.cms
  25. 25. Conclusions • When countries host global events like the Olympics, they inherit all the good and the bad that a globalized world has to offer • The international reinsurance market does not require a government certification for a sabotage and terrorism policy to be triggered • Buying embedded coverage, whilst it may be a practical option, it may not always get you or your client the best cover available • The Mumbai attacks have set precedent in uncharted waters when it comes to terrorism liabilities 25
  26. 26. Obrigado Questions?

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