The American army has been forced into the unusual move of insuring its international bases against terrorist attack through Lloyd's of London in Britain because US companies have refused to take on the risk.
The multi-million pound contract covers terrorist attacks on the property of more than 10 US military bases around the world and was placed with a number of specialist syndicates in Lloyd's last month. The contract covers buildings but not military equipment or loss of life and will pay out for any kind of terrorist onslaught apart from chemical or nuclear bombs.
This is the first time the US has insured its military property with companies which are not American. The high-risk contract has been passed to Lloyd's because many of the country's own insurers refused to cover terrorist risks as part of general property cover after 11 September and want the US government to step into the breach.
In the meantime a group of Lloyd's political risk specialists have formulated the first ever policy for US companies or state bodies to buy insurance specifically for terrorist attacks.
One underwriter close to the US military bases deal said the project was not so risky it could not be covered. "There are people at Lloyd's who have decades of experience of writing political risk and we apply complex models to the situation – it is not guesswork," he said.
The specialist terrorist policy was written by Simon Koe, of the Lloyd's broker Humphreys Haggas Sutton, and Ben Garston, a partner of MAP syndicate.
Mr Koe said: "This shows that Lloyd's is not just a load of old duffers. It is what Lloyd's does best – spreading the risk of writing specialist cover and respond quickly to demand in the market."
The US government has used the new Lloyd's terrorist cover policy to insure a number of its embassies. The policy has also been taken up by companies with property deals in high-risk areas such as Times Square in New York, which were put on hold when US insurers withdrew terrorist cover.
Until 11 September, terrorist cover was included in US property policies practically free because insurers thought the risk on US soil so low.Reuse content