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Oct 2019

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MENA: Terrorism risks decline, but remain complex

Source: Middle East Insurance Review | Jul 2019

Terrorism risks across the MENA region have decreased in line with the collapse of Islamic State (IS). However, risks persist in the energy sector, particularly oil and natural gas facilities, said Marsh in its ‘2019 Terrorism Risk Insurance Report’.
 
Marsh added that terrorism activity has declined since 2017 as IS suffered heavy territorial losses. While the group no longer holds territory, it retains the ability to launch IED attacks in southern Syria and central and northern Iraq.
 
Civilians and their property have been the principal targets of terrorism, with 42% of terror incidents in MENA between 2017 and 2018 targeting civilians. There is a growing risk of successful attacks on property and infrastructure in politically unstable countries, including Iraq, Syria, and Yemen. Houthi militants in Yemen have clear intent and increasing capability to target aviation assets, as well as sea vessels and oil infrastructure, using unmanned air and sea craft and ballistic missiles.
 
Most exposed sectors 
The report said terrorist attacks on oil and natural gas facilities have decreased from their peak in 2014-2015, but remain widespread. In Algeria, energy facilities remain vulnerable to cross-border militant attacks. Areas most at risk are facilities closest to Algeria’s southern border with Mali and eastern border with Libya. In Iraq, there is evidence of increased attacks by IS against energy sector targets.
 
There is also an elevated risk of one-off attacks targeting cargo belonging to western companies operating in Saudi Arabia. Companies most at risk include energy and fuel suppliers as well as those supplying religiously sensitive goods such as tobacco and luxury products. Risks are similarly elevated in Egypt, particularly in northern Sinai. Roadside IEDs pose high risks to cargo, particularly along the Suez-Ismailya-Port Said road that runs parallel to the Suez Canal.
 
New and innovative solutions
The means and perpetrators of terrorist attacks continue to shift, with soft or relatively unprotected targets becoming more of a focal point, the report said. In response, insurers are continuing to develop and offer new and innovative solutions for risk professionals who have been challenged to adopt new strategies to protect properties, employees, and balance sheets in response to constantly evolving threats.
 
Risk ratings
The market for property terrorism insurance remains competitive for most buyers, due in recent years to a steady decline in the number of global terrorist incidents and minimal insurance claims.
 
The report explored the state of terrorism and the terrorism insurance marketplace in key regions. There was a trend toward decreasing terrorism risks between May 2018 and May 2019, said Marsh’s World Risk Review ratings system.
 
In that period, risk ratings fell in 116 countries, while increasing in only 34. Rating scores fell in many countries as security services redoubled their efforts to tackle international terrorist groups in the Middle East, Europe, and sub-Saharan Africa.
 
Despite a trend of decreasing risk, the dynamic nature of terrorism all but ensures that new threats will arise in the coming years. The territorial defeat of IS will likely bring new threats both in the Middle East and in western states. M 
 
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