Earlier this year a major UK tour operator was ‘forcibly’ repatriating customers who had been enjoying a vacation in Kenya and cancelling all scheduled vacations to the area until 31 October. This was in response to a ‘travel advisory’ from the UK government’s Foreign and Commonwealth Office relating to a high threat of terrorist action by the Muslim extremist group Al-Shabaab.

There is maybe a question mark over whether the company should have given is customers the option of staying until their original date of return, but one can understand that such terrorism alerts do land a tour operator in rather a quandary, especially when the advice is to avoid ‘all but essential’ travel. It needs to act responsibly, not least to avoid reputational damage. No doubt the firm has been asking the same sort question as insurers do: how big, actually, is the risk?

The same question can be asked of the Foreign and Commonwealth Office – and for that matter to similar agencies or organizations, like the US State Department’s Bureau of Consular Affairs or Australia’s Department of Foreign Affairs and Trade. And they all have a reputation to preserve; should some of its citizens be caught up in a terrorist incident they don’t want to be accused of failing to give good advice. So just as the tour firm erred on the side of caution, one can expect governments to do the same as well.

What is your underwriting view of travel to or residence in Afghanistan or Iraq? Decline? Hefty per mil extra? We recently calculated the mortality risk for non-military personnel in both countries. The figures over the years seem quite well documented but even allowing for some under-reporting of deaths and some under-estimation of the exposed to risk the excess death rates were trivial. The same seemed to be true of the general population, despite the heavy toll of war and subsequent insurgency – although those in centers of population were arguably at higher risk than people in remote areas.

So in theory standard rates for both countries.

However, maybe it isn’t that simple:

  • Not all work in places like Iraq and Afghanistan carries the same risk, for example communication engineer versus employee of a private military company (whom one might refer to as a mercenary soldier).
  • Risk varies geographically. An individual working in a ‘safe’ area may transfer to a more risky one.
  • The situation can change abruptly.
  • It may be difficult to ascertain the exact nature of an applicant’s work; private military personnel may describe their occupation in innocuous terms, and non-disclosure may well not become apparent for some time – and maybe not before the end of any contestability period. Given the risks involved in some occupations there is arguably an above-average probability of non-disclosure.

So there is difficulty in detecting and quantifying risk, but not necessarily in all countries in all situations. In our previous article we argued that an underwriter’s prime interests and concerns should be occupation (as a strong indicator of potential extra risk) and anti-selection (always an issue but actually likely to be more apparent or at least more easily suspected where travel/residence is concerned). We still think those arguments hold good.

Do those travel/residence sections in the underwriting manuals really do the right job?