Terrorism attacks surged in 2016.
POLITICAL AND TERRORISM RISKS ARE ON THE RISE BY JULIANN WALSH
Political violence and terrorism place corporations in the crosshairs.
Terrorism attacks more than doubled in Western countries last year, surging 176 percent to 96 attacks, from 35 in 2015, according to
Aon’s newly released 2017 Risk Map.
There was a 14 percent uptick
worldwide in terrorist attacks, to 4,151
from 3,633 attacks last year.
The terrorism and political
violence ratings in Aon’s report
reached the highest point since 2013,
capturing not only terrorism but also
the risk of coups, civil and interstate
conflicts, and rebellions.
While the United States saw its
highest number of terrorism incidents
in a decade, the survey predicts that
the U.S. threat is likely to remain
moderate in 2017.
The takeaway is that this global
spike in attacks coupled with populist
nationalism will create a much more
volatile operating environment for
international business, the report said.
The “Aon Political Risk Map” has
tracked changing risks for businesses
and countries across emerging and
frontier markets for the past 20 years.
This year’s survey found the
terrorist threat continues to evolve,
affecting an ever wider set of
commercial sectors in more countries,
with more diversified tactics and intent
to kill. Impacts include loss of life,
business interruption and disruption
to supply chains.
Businesses are also facing growing
exposure to worldwide political
“The shifting dynamics around
terrorism and political violence,
reflected in the global events seen in
2016, are presenting an increasing
challenge for companies,” Scott
Bolton, director of terrorism at Aon
Risk Solutions, said in a statement.
The Middle East and North Africa
have the most dense concentration of
dangerous countries in the world, with
heightened political risk and elevated
levels of political violence spilling
over to neighboring regions and
undermining trade and tourism.
Other violent risks are also evolving
at the geopolitical level, leading to
increased defense spending, more
authoritarian forms of government
and a weakening consensus between
There are few indications of an
overall improvement in in 2017. This
underlines the importance of
considering crisis management perils
that go beyond property damage,
particularly in sectors such as oil
and gas, transport and retail. Oil
and gas companies were the target
of 41 percent of terrorist attacks on
commercial interests in 2016.
“Global politics in 2017 is moving
in a more violent and crisis-prone
direction,” Henry Wilkinson, head
of intelligence & analysis at Risk
Advisory, said in a statement.
“The balance of violent risks is
starting to tilt from non-state actors
back to states.”
Islamic State- and Al-Qaeda-linked
terrorism remains a critical threat
in dozens of countries, impacting
sectors including oil and gas, aviation,
tourism, retail and media, Wilkinson
said. But businesses must develop
strategies to face threatening risks
from the geopolitical realm as well.
Populism and protectionist risks in
developed economies could lead to an
increase in political risk in emerging
and frontier markets as their resilience
While political risks remain
high, particularly in the Middle East
and Africa, reform efforts and past
economic adjustment have increased
resilience, the report said. &
BROKER WINS DUTY OF CARE CLAIM BY ANNE FREEDMAN
A federal appeals court ruled a broker did not breach its fiduciary duty in the placement
of insurance policies that turned out to be fictitious.
The u.s. 7th circuit court of appeals ruled that a brokerage was not liable for negligence and id not breach its fiduciary
duty when it was connected to the
procurement of fraudulent insurance.
Norman-Spencer Agency of Ohio
was sued by Western Consolidated
Premium Properties (WCPP) — a
risk purchasing group of commercial
and residential properties — and M.G.
Skinner & Associates — a program
administrator for WCPP — claiming
that Norman-Spencer owed them a
duty of reasonable care in procuring
In 2011, Skinner sought renewal
coverage for WCPP properties, with
a total insured value of nearly $3.5
Through a chain of brokers and
sub-brokers, the insurance was
ultimately provided by Michael
A. Ward and his company JRSO
LLC. At one point Norman-Spencer was retained as the JRSO
program administrator for some of
the properties, overseen by Myan
WCPP and Skinner — which had
to procure other insurance at a cost
more than $2 million higher than
the fraudulent insurance — filed suit
against Norman-Spencer and other
brokers in the chain for negligence
and breach of fiduciary duty. All
settled except Norman-Spencer.
The U.S. District Court for
the Northern District of Illinois
dismissed the WCPP’s case in favor
of Norman-Spencer, ruling that the
brokerage’s assistance in placing the
insurance was never requested and
that it received no funds from the
placement. It dismissed the Skinner
case because the company “was not
the ‘insured’” on the policy.
WCPP and Skinner appealed, and
“The district court was correct:
there is no evidence that any broker in
the procurement chain ever requested
that Norman-Spencer serve as a
sub-broker to procure insurance for
WCPP. Norman-Spencer had no duty
to WCPP … ,” it ruled. &
In that role, Norman-Spencer
issued 64 “backlogged policies” that
were bound before the brokerage
became involved. It sought to be
involved in placing policies for WCPP
but Ward said “the margin would be
‘too thin’ if Norman-Spencer earned a
commission on the placement.”
“Along the way, Norman became
aware of facts that [Skinner] and
WCPP contend should have been
‘red flags’ showing Ward’s lack of
trustworthiness,” according to the
court opinion issued Jan. 4.
Norman-Spencer did not share
that information. Eventually, it was
discovered that Ward had created a
fictitious insurance policy for WCPP,
among others. He was convicted of
wire fraud and sentenced to 10 years
A broker was found to have no duty to an
insured on a fictitious policy.