A look into travel insurance…
A note on terrorism, before we go deeper into the subject. Global terrorism is clearly a real threat, as the events (and indeed some of the wars) of the last 14 years have illustrated. It is also true that specific countries or parts of the world have, at different times, had or still have a problem with terrorists endemic to their own shores.
Sri Lanka, for instance, experienced sporadic bombings and terrorist attacks during the long years of the war between the Tamils and the Sri Lankan government: a war that ended bloodily not so long ago. India has been the victim of terrorist attacks on several occasions in the last five years. Before the Arab Spring, Egypt was known periodically to suffer from internal terrorism, often specifically directed against foreign tourists – who the perpetrators saw as propping up an economy funding a dictatorship.
It is important to note also that, for the purposes of this discussion, no judgement is made on the cause of those who bring violence into the lives of tourists. This is not an argument about the reasons why people living in or under specific regimes may feel, however wrongly, that such actions speak louder than words: it is purely an exploration of insurance and specifics within insurance policies.
Risk and Coverage
The purpose of any travel insurance policy is to protect the insured against risks specific to their situation. Commonly, travel insurance deals with potential medical conditions and emergencies; as well as theft, accident and loss of money or property. All of these things have a clear potential to occur when a person leaves the country of his or her residence and travels somewhere else.
Notably, though, every one of the items so far addressed also has the potential to happen to a person in his or her country of residence. Which leads us to examine the difference between general risk and endemic risk more closely.
An endemic risk is a risk that applies because of a person’s specific location, and his or her relation to that location. A clear conceptual example of endemic risk is the risk of shark attack when swimming in seas in which sharks are known to be present. In terms of risk assessment, if you tie some freshly killed fish to your belt and go swimming with Great Whites, no insurer on this earth is going to touch you with a bargepole – or at least not without your paying massive premiums to it.
There is, though an importance attached to being insured for endemic risk – even in the hypothetical example outlined above. For instance, if your job absolutely demanded (for whatever reason) that you swim with Great Whites, then you would absolutely need insurance against the possibility that one might kill you. Otherwise, dong the job in the first place would be the action of a lunatic.
It is not the place of this discussion to speculate on the sanity of anyone who voluntarily swims with Great Whites, any more than it is its place to think about why someone would knowingly go into an area where there is a danger of terrorist attack. It is, however, pertinent to point out that the primary importance of insurance covering such endemic risk is that dependents may expect to be looked after in the event of the insured person’s death.
Coverage versus Exceptions
So a person knowingly travelling to an area made dangerous by terrorists must find coverage against terrorism. Given the extreme nature of the risk, he or she must also find out exactly when that coverage may be expected to pay out, and when an exception to the rule prevents compensation. All insurance is subject to exceptions – rules that define when a company need not compensate. Clearly, where such real risk is present, it’s vital to know at what point an insurer no longer pays for terrorist action.
Lisa jane is a former international journalist. She is now writing a book on terrorism in the modern age and is using www.directasia.com.hk/en for reference.
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