The recent report indicating that aviation insurers have announced that "future cover would exclude terrorist threats" (15 July, Insurance Times) brings into focus for national as well as international commercialisation and transportation of goods the following issues:
(i) With regard to those goods which are transported door to door, if the journey involves an air leg, the terrorist risk of that leg will be uninsurable as far as the insurance industry is concerned
(ii) When goods that are transported door to door involving transport by air, when seeking insurance for the transportation of goods, how will the lack of cover of terrorist risk for air transportation affect the insurance for rail, road, sea or other modes that would be undertaken during the rest of the door to door movement ?
(iii) Is this policy going to be followed by insurers across all modes of the transport industry?
(iv) Terrorism is a matter of national security and hence the primary responsibility of governments. Are the respective governments going to support the transport industry with regard to insurance for terrorism? The report in the Insurance Times does refer to a meeting of experts this week within the EU to see what solutions it would offer to the industry.
The US Government issued a final rule related to the implementation of the Terrorism Risk Insurance Act of 2002 (Terrorism Risk Insurance Program; Claims Procedures) under which it is stated that under the Act "the Federal Government will share the risk of insured loss from certified acts of terrorism with commercial property and casualty insurers until the program ends on December 31, 2005". It is not known as yet if the programme is to be extended beyond this date.
(v) This development is bound to have a significant effect within the insurance industry as a whole as far as transportation is concerned.
(vi) The difficulty of insuring against a terrorist act brings into question once again the need for a convention that will require a prior notice, a manifestation or other similar document issued by the person who is in charge of the packing with such declaration to be endorsed when the goods pass to another party throughout the transportation process until complete .
Samuel Perez-Goldzveig
Anti-terrorism consultant
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