According to Nick Bacon, chief executive of broker Bowring Marsh, the unrest that overthrew the government of Tunisia has demonstrated the unpredictability of political risk.
"It's a good indicator of how quickly things can change in a country which has actually been stable for quite a long time," Bacon said in a briefing at Marsh's offices in London. Bowring Marsh is Marsh's international wholesale arm.
Bacon would not speculate on possible exposures by Bowring Marsh clients in Tunisia. He said he believed such exposures are not high.
"It doesn't mean that there aren't large placements in the marketplace," Bacon said. "It's just that we don't think we're actually responsible for them at the moment."
Other countries in the region that have seen recent unrest include Algeria, Yemen and Egypt. Bacon declined to discuss possible political threats to Algeria, which has substantial energy exports. He said he would have believed Algeria to be more vulnerable to political unrest than Tunisia.
All this turmoil comes as new insurance capacity has helped push terrorism rates down by 10%, Bacon said. The downward pressure on premiums is likely to continue over the next six months, he added.
Bacon said some claims from last year's political upheavals in Thailand have not yet been settled, due to debate about whether losses would be paid by property damage, terrorism or political violence policies.
"Rates in Thailand are dropping, but they're still probably four times what they were before the problem," Bacon said. "At one time, they were probably five or six times what they were previously."
The unrest in Tunisia, Bacon said, has created opportunities for Marsh's Mobile Asset and Commodity Expropriation product, which was launched in December. The policy has been designed to protect such expensive equipment as rigs and power generators that tend to be moved from country to country. Claims on the three-year policy can be triggered by terrorism and political violence, with limits of up to $100 million. Perils would include abandonment, deprivation and expropriation.