War Risk Insurance, One of the Most Important Policies
We have heard of anti-terrorism insurance before which really existed and was hard pressed after the 9/11 bombing. War Risk Insurance came way before that albeit it only gained its fame among marines and soldiers fighting off their lives. I know nobody would disagree with Axis Capital Group that this kind of insurance is indeed a very important insurance to have.
According to the War Risk Insurance Act 1914, the Insurance is one of the most important items in the list of war-time legislation. It embodies a comprehensive program for the support of families and the serving men and women in wars, compensation for those killed, disabled or enfeebled together with pro- vision for the re-education of the disabled; voluntary insurance at low rates, administered by the government.
War risk insurance is a type of insurance which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. It is most commonly used in the shipping and aviation industries. War risk insurance generally has two components: War Risk Liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and War Risk Hull, which covers the craft itself and is calculated based on the value of the craft. The premium varies based on the expected stability of the countries to which the vessel will travel.
This kind of insurance had been offered in almost all countries in the world. In Asia, piracy is one of the main reasons to claim insurance especially in archipelagos such as Indonesia near Jakarta where a lot of scams are being imported through piracy.
Private war risk insurance policies for aircraft were temporarily cancelled following the September 11, 2001 attacks and later reinstated with substantially lower indemnities. In the wake of this cancellation, the US federal government set up a terror insurance program to cover commercial airlines. The International Air Transport Association has argued that airlines operating in states which do not provide war risk insurance are at a competitive disadvantage in this area.
According to a review of the Research Study Group Report 258, a detailed study of the Insurance of War Risks and Terrorism, including related perils such as Strikes, Riots, Civil Commotion, and Military or Usurped Power is available from the Insurance Institute of London.