Coverages aimed at protecting citizens in time of terrorism and war were another common theme for unique risks, with examples spanning several decades.
James Griffith, president of Princeton Risk Managers, offered his recollection from the Vietnam era–at the same time revealing a hands-on approach to risk evaluation.
"In my early days in the business, we insured the firm which was able to correct a jamming problem in the newly introduced M16 rifle for the U.S. military back in the mid-1960s," he wrote in an e-mail. "On my visit to their design facility, they demonstrated how they accomplished this on one of their test weapons."
More recently, Todd Wescott, lead commercial underwriter for First Specialty, has been evaluating bomb detection equipment that can be used in major airports. Unlike technology presently in use, which produces an X-ray image of objects in a bag, the new equipment–being developed by one of the largest makers of MRIs–will produce three-dimensional images.
It will also check for gun-powder residue, eliminating the need for security officers to randomly yank bags and swipe the zippers with pieces of cloth to perform such checks, he said.
While the liability policy, potentially, could respond to claims from an airport incident caused by failure of the equipment to detect a bomb, Mr. Wescott said he's more concerned with a different exposure–that of an operator sitting in front of the machine for hours at a time. Because of that, the insurer is proposing claims-made coverage, he said, noting that a $1 million products aggregate with defense inside the limit also makes this "very, very restrictive coverage."
"We're looking at a quarter of a million dollars" in premium at a minimum, he said. "But we really didn't get it past that," he added, noting that the equipment is awaiting the slow process of government approvals.
A slow process–on the claims adjusting side of the equation–is just one challenge being successfully hurdled by CRC Insurance Services on a multimillion-dollar, multiyear contract it placed for a logistics firm moving consumer goods in Iraq.
Guy Rawlins of CRC's Atlanta office explained that the wholesaler placed two phases of coverage with a panel of U.S. and international insurers–truck cargo, including war and terrorism coverage for the goods in transit once they hit the roads in or around Iraq, followed by coverage for those goods while housed in Iraqi depots and stores.
The insured, which specializes in moving goods from one point to another, ships surplus items–"the sorts of things you might see in K-mart that…would have otherwise gone to waste, [including] anything from CDs and DVDs or personal computers to a bag of chips," Mr. Rawlins said.
The claims settlement process is ongoing, he said, describing losses from attacks by rocket-propelled grenades, thefts, ambushes or other acts of war, and noting that many incidents occurred 18 months ago.
"You can't go into the streets of Baghdad" and ask when goods were stolen. "It's too dangerous," he said, adding that CRC's adjusters rely on information from third-party witnesses. Data collection is also a complicated process involving the various parties that must handle information, including military personnel, who filter the data to ensure the sensitive information doesn't fall into the wrong hands.
The presence of the military, covertly shadowing the trucks behind the scenes, and an insured experienced in modifying safe routes monthly, even weekly, has kept individual loss amounts to levels that are "really no different than if we were shipping cigarettes or DVDs here in the states [through] tough parts of urban cities," Mr. Rawlins observed.
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