NU Online News Service, Feb. 24, 12:56 p.m. EST

The upheaval in the Middle East is rattling political risk clients who are relying on rumors and sparse pieces of information to determine if they will be subject to losses in the region, according to brokers familiar with the risk.

“It is a sensitive time right now. Nothing is for sure at the moment,” said Corina Monaghan, vice president of political risk for Aon Risk Solutions.

Right now, it is difficult to get precise information about claims coming out of the region, specifically Libya, noted Andrew van den Born, executive director of Willis Ltd. in London. Information that is available comes through market rumors and individual brokers’ experiences, he noted. Much of the claims information will remain confidential and will not be disclosed. The few insurers who will disclose will not do so until the end of the year when they report their financials, he noted.

Mr. Born said the political risk market “has seen some losses, but the numbers are not high at the moment. It is easily covered by the insurance markets.”

However, noted Ms. Monaghan, there are some Aon client’s that are very concerned with their business property in Libya. Others are worried with contractor or import issues that could impact their business.

Currently, clients with business interests in Libya are in crisis mode and trying to get a handle what is happening in that country, she said.

The brokers noted that for U.S. businesses, there is little exposure, at least for oil and gas interests. Most of the investors in this sector are from Europe, but there are other U.S.-based businesses that have interests in Libya unrelated to oil and gas.

The events in the Middle East have had one upside, the brokers noted, which is that clients are taking more initiative in reviewing their exposure to political risk.

“[Clients] can face unrest quickly and they need to be protected against it,” noted Mr. Born.

Ms. Monaghan said clients are now seeking feedback from those on the ground, asking what the political pulse of the nation is. Senior managers are also taking a more active role in understanding what their potential losses and claims could be if there is political unrest.

“There is more interest in political risk than ever before,” she said.

However, depending on the region and the risk, it can be difficult and cost-prohibitive to obtain. That issue, she noted, is being determined on a risk-by-risk, project-by-project basis and the market is not frozen.

The major questions going in for a buyer is, who is in charge of a country and what is their attitude toward American businesses? In some places this is difficult to ascertain presently.

From a buying perspective, she said, the time to purchase is not when a crisis is developing, but to lock in coverage while the risk remains moderate.

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