War and Terrorism Insurance: How to Promote Long-Term International Stability and Affordability

Abstract

The December 2002 issue of this journal was dedicated to an examination of the varied responses of governments and aviation insurers following September 11, 2001. This article builds on those experiences to suggest that the leading economies of the world can lay foundations for a comprehensive international structure of stable and affordable insurance for War and Terrorism risks covering all classes of personal and commercial insurance business – not limited to any one sector such as aviation, marine, energy, automobile, property, life etc. Making best use of existing resources will require a permanent partnership between States and the insurance/reinsurance communities using the age-old practice of spreading risk as widely as possible (Appendix A). These principles are embodied in a Draft Convention (Appendix B) – submitted as a focus for discussion and implementation based on the concept of insured Sovereign Risks i.e. the risks to civilians, commerce and private property in general, arising out of acts by or against States.