Underwriting for high risk territories

Dalene Allen, underwriting expert and co-founder of specialist long-term risk cover provider, Altrisk, looks at the challenges in underwriting applicants who travel to or work in high risk territories.

For anyone travelling to, or working in, high risk territories, insurance cover is crucial, but not always easy to get.

High risk regions include countries like Iraq, Sudan and Somalia. Even places such as Nigeria have a concerning risk profile, due to the increasing trend of corporate kidnappings and ransom demands.

Risk factors

• Political stability - this influences the safety of the individual due to the likelihood of war, acts of terrorism or other acts of unrest that could pose a direct threat to the individual or jeopardise care in the case of an emergency.
• Access to medical care – underwriters consider the nature of medical facilities in a territory, the level of care they can provide, the medicines and instruments available, the skills of medical practitioners, the accessibility of medical facilities and the availability of emergency vehicles.
• Accident risk– socio-economic, political and infrastructural factors influence accident risk. Underwriters would also consider accident statistics and evaluate the relevance of the causes.
• Infectious diseases – some areas are rife with diseases. The likelihood of an individual being exposed to such diseases, and the medical care available to treat such a disease is considered.

However, it is still the individual that is underwritten, so the client’s health and occupation remain key factors. Would a traveller suffering from a heart attack in Iraq receive the same care as a traveller in, for example, the US? Would a bodyguard be more at risk in Iraq than an accountant?

Scope of cover

The underwriter then has various ways of granting cover.

• Exclude events in the high risk territory in question but retain full cover while in South Africa – for any high risk territory.
• Offer cover for natural death only – possible for countries like Ethiopia, Gabon, Iran.
• Load for natural causes and exclude for accident – possible for countries like Iraq, Pakistan, Afghanistan and North Korea.

In practice

To illustrate, some of the important underwriting factors that would be considered when assessing an application for cover in Sudan are detailed below.

Political stability

• South Sudan is contaminated with unexploded land mines.
• Terrorism against US and European interests and Westerners themselves is prevalent.
• An increase in political activism, violence and aggression, ahead of elections.

Accident risk

• Death by road accidents doubled between 1999 and 2008.
• One person dies every five hours and one is seriously injured in traffic accidents -45% are pedestrians.
• 40% of vehicles are unlicensed.
• 70% of accidents are due to tyre bursts.
• Poor road infrastructure and poor street lighting.
• General disregard for road rules.
• One of the worst air traffic accidents rates.

Access to medical care

• Very few facilities outside Khartoum and these fall short of conventional standards.
• Medical practitioners unable to treat more than minor injuries.
• Medical facilities poorly equipped, patients must pay cash upfront.
• No ambulance service, limited emergency assistance.
• Blood and medical supplies, including antibiotics and surgical instruments, are scarce.
• Medicines only available intermittently.

Infectious diseases

• Chloroquine-resistant malaria prevalent.
• Typhoid and other tropical diseases are rife.

Underwriting for these territories is based on extensive experience and research supported by case-based reasoning. While good quality and statistically relevant data is needed, it is often hugely challenging to obtain this for areas where information is not readily available and reporting of any kind is virtually non-existent.