An airplane unloads its shipment at Rafik Hariri International Airport. (Credit: Mohammad Yassin/L'Orient-Le Jour)
BEIRUT – War risk and political violence insurance premiums have considerably increased in the aftermath of an Israeli strike that killed senior Hezbollah commander, Fouad Shukur, in Beirut’s southern suburbs on July 30, and the subsequent assassination of Hamas chief Ismail Haniyeh in Iran. The attacks have left the entire region holding its breath in fear of the situation escalating into a full war between the “axis of resistance” (Iran and its allies) and Israel.
“There is no way to give one concrete rate, because prices of war risk and political violence covers are changing on a daily basis”, said Assaad Mirza, President of the Association of Insurance Companies of Lebanon (ACAL). Meanwhile, Roger Zaccar, Managing Director of Commercial Insurance, whose premium packages are partly sold through its mobile application Comin, estimates that the rates for political violence insurance may have gone up by at least three times their initial price amid ongoing uncertainties in the country.
The increase in the price of premiums, coupled with the reluctance of some insurance companies to provide these types of coverage in Lebanon, has had a significant impact on international shipping activities and air traffic.
Zaccar told L’Orient Today that “most airlines are canceling their flights to Lebanon following increased pressure from their insurers — who would otherwise not provide coverage in case of any war related damages, or even go as far as canceling their insurance policy.”
It’s also becoming increasingly hard for airlines to come by war risk coverage and political violence insurance. “When their main insurer is reluctant to provide such coverage, airlines have to turn to alternative insurance companies which end up imposing extremely high premiums,” and this extra cost gets in turn passed down unto customers, who are having to pay higher-than-usual prices for flights in and out of Lebanon, explained Zaccar.
These changes have also had a considerable impact on freight transport, with shipping companies also struggling to find political violence coverage, or having to pay increasingly high premiums to insure their containers to and from the country, asserted both Mirza and Zaccar.
“Add to that, the costs of transporting containers which have become very high in light of the ongoing war in the region, this is being reflected on the price of goods that reach the country, rendering products and commodities more expensive than they used to be,” added Mirza.
Caretaker Economy Minister Amin Salam also attributed the rising market prices to the increase in insurance premiums for delivering orders to Lebanon during an emergency meeting with various syndicate representatives on July 31.
Without providing their name, Mirza also told L’Orient Today that one of the biggest insurers in Lebanon announced they would no longer cover war risks nor include them in the lines of new life insurance policies. However, customers who had already bought previous policies before these changes will continue to be covered.
Other insurance companies across the country are likely to follow suit, added Mirza.