Talbot Underwriting has launched a new product termed Global Emergency Response (GER) insurance.
Talbot, the London market arm of Bermudian Validus, has partnered with JLT Group, which will broker the insurance, and Northcott Global Solutions, a London firm which focuses on 24-hour crisis response, particularly emergency and medical evacuations and those needed due to political and security crises.
Talbot adds the specialty product to its Lloyd’s stable, where it is already the second largest underwriter of war and terrorism covers, as well as closely aligned kidnap and ransom (K&R) and accident and health (A&H) teams.
“The basis for developing this cover was conversations with clients over the past few years, who have a duty of care to employees, whether expats or local nationals,” said Sam Aiken, head of K&R at JLT Group.
“The product is geared towards all people risks, primarily response services, followed by an indemnified solution for financial losses. It’s designed so that there’s a single point of contact for response to a range of perils,” said Aiken.
This includes scenarios such as K&R situations, crisis evacuation and medical evacuation of staff, amid natural catastrophe perils such as an earthquake, or manmade disasters such as terrorism, war and political violence.
“It’s a catastrophe risk solution because clients have human capital exposures in addition to property,” said Tom Howard, class underwriter at Talbot Underwriting.
“They need the ability to continue to conduct business despite a catastrophic event taking place,” Howard said.
Howard questions whether even some large organisations have the capabilities to deal with crises with K&R, extortion, emergency evacuations, another catastrophic event and media interaction all at the same time.
However, Lucy Higgins, senior broker and account handler at JLT Specialty, suggested most demand would come from small-and-medium-sized enterprises (SMEs).
“Our main target is SMEs. The major reason for that is that large multinational corporations have a fairly sophisticated approach in place to crisis management, but SMEs can lack that sophisticated approach,” she said.
“So what that means is there’s a need for brokers to find that response solution and incorporate this with financial indemnification to back it up,” added Higgins.
Regional interest for the product is expected from Latin America and Asia, ranging from mining and energy firms to financials.
“The areas we’ve talked to most – who are coming to us looking for this solution – are the extractive industries, in places such as Latin America but also those operating around the globe,” said Aiken.
“Another area of traction is in Asia. We have a dedicated Special Risks broker based in Hong Kong servicing our Asian clients across the region for whom this has repeatedly come up as a concern,” he said.
“The region is a big growth area with a lot of investment,” Aiken added.
An example of this is China’s vast One Belt, One Road strategy to build out its trade and investment links, highlighted by a recent Swiss Re Sigma study.
Duty of care and social responsibility risks for directors and officers are becoming more of a focus in Asia, Howard suggested, particularly for Asian firms with overseas offices and projects.
“In Asia, and for developing countries, some of the clients are less au fait but learning quickly about the concept of social responsibility for what they do locally,” he said.
He cites an example of new legislation in China – Article 137 – which has upped the risk of criminal proceedings against management.
“If a project owner, construction firm, or project manager reduces quality in a project in violation of the laws and regulations, and which results in a severe accident, such as a death, the firm would be criminally guilty of causing a significant accident and the directly responsible persons would face imprisonment for one month to ten years,” said Howard.
“It’s interesting to see how they’re catching up from a legal standpoint. There’s not the same litigious situation as in the West, but it is developing,” he added.
The Talbot product comes with a standard K&R limit of $1m, although this can be tailored to clients’ geographical and operational needs.
“The limits are flexible to the client. For example, it could be extractive industries operating in remote areas, or financial services clients working in major cities,” said Howard.
The evacuation element, for scenarios such as political crisis and civil unrest, is geared to a standard limit of $100,000 per person and $1m in aggregate. For medical evacuations, an aggregate per event limit of $1m is standard.
The product will outsource some services as required on a regional basis, through its partnership with Northcott Global Solutions, providing the immediate crisis response services.
The secondary elements include an indemnity limit of $250,000 aggregate or $500,000 for a natural catastrophe event. The syndicate’s maximum indemnity for the product is set at $40m.