Lebanon should have a risk pool for political violence insurance

With the recent slew of bombings further entangling Lebanon in the Syrian civil war, political violence insurance in the country is becoming increasingly sought after, as hotels, banks and malls are seeking to protect their assets. This is paired with international reinsurers becoming increasingly weary to underwrite risks in the present volatile situation, resulting in political violence insurance becoming less accessible and affordable, with premiums hitting the double digits (see story). The smart solution lies in numbers: Lebanon should set up a risk pool that would make political violence insurance less vulnerable to loss and more affordable to its businesses. Such pools would spread the reinsurance risk among all actors, with a part of each premium entering the pool and building up a reserve. In the event of a loss, insurance companies can draw on the assets of the pool. This would allow insurance companies to set lower premiums and