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The Arab War Risks Insurance Syndicate, also known as Awris, placed Lebanon on “Hold Cover” since Friday, October 13, 2023. This term, commonly used in maritime insurance, means that the insured party’s interest remains covered in the event of a circumstance arising that would cancel the coverage without prior agreement.
The Awris, based in Bahrain, informed insurance companies in Lebanon via an email sent on Friday, October 13, 2023, that due to the tensions at its southern border following the outbreak of the war between Hamas and Israel, Lebanon is now classified as a high-risk country in the Middle East. As a result, Lebanon has been placed in a status of “Hold Cover.” This essentially means that Awris will decide on a case-by-case basis whether to provide war risk insurance to cargo ships carrying goods to Lebanon. This decision is non-retroactive, meaning that all war risk insurance policies issued by insurance companies in Lebanon for cargo shipments before the date of October 13 will remain valid and in effect.
The Arab War Risks Insurance Syndicate serves as the reinsurance provider for insurance companies in Lebanon concerning war risks associated with maritime cargo transportation. Since 1980, this fund has been offering war risk insurance coverage in the Arab world, supported by top-tier global entities, with its primary objective being the protection of the interests of Arab and regional insurance markets.
London’s Market
When interviewed by This is Beirut, several Lebanese insurers highlighted that the demand for insurance policies covering property damage due to war has slightly increased since the outbreak of the war between Hamas and Israel. The reason lies in the additional premiums required by reinsurers, which the leads struggle to pay. In practice, insurers do not automatically issue a war risk insurance policy covering property damage. They go to the reinsurance market in London and filter the best offer for each client on a case-by-case basis. Ultimately, it is up to the client to decide whether or not to consent to paying the additional premium.
Premiums
In times of crisis, disasters and wars, insurers and reinsurers increase their premiums. An additional premium for policyholders is viewed as a standard procedure in extraordinary situations where insurers and reinsurers take a prominent role in the economic landscape. As such, they are responsible for compensating the victims.