Apresentação realizada no 5º Encontro de Resseguro do Rio de Janeiro (abr/2016)

1. Political Violence (re)insurance
When hosting the Olympic Games is fun but not a game
Napoleón Montes-Amaya Vice President Specialty Lines
Hiscox MGA

2. About Hiscox
Olympic Games History
Products available
Relevant facts for Brazilian market
New terrorism law in Brazil
Cover for construction risks in Brazil
NCBR Cover
Terrorism liabilities case study: Mumbai
Conclusion
Questions
Agenda
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3. Hiscox
About us
• Origins dating back to 1901 at Lloyd’s
• Hiscox is an international specialist insurer and reinsurer with a
reputation for integrity and quality
• We are not a mass producer of insurance policies, we target
specific types of (re)insurance, in which we develop expertise,
often focusing on areas other (re)insurers find too complex to cover
• Hiscox Syndicate 33 has an A (Excellent) Syndicate rating from
A.M. Best. It also benefits from Lloyd's own ratings, A (excellent)
from A.M. Best, A+ (Strong) from Standard & Poor's and A+
(Strong) from Fitch.
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4. Hiscox
About us
4
USA
Atlanta
Chicago
Dallas
Los Angeles
New York City
San Francisco
White Plains
Guernsey
St Peter Port
Latin American
gateway
Miami
Bermuda
Hamilton
Europe
Amsterdam
Bordeaux
Brussels
Cologne
Dublin
Hamburg
Lisbon
Lyon
Madrid
Munich
Paris
UK
Birmingham
Colchester
Glasgow
Leeds
London
Maidenhead
Manchester
York
Asia
Bangkok
Singapore
Lloyd’s Brazil
Rio de Janeiro

5. 5

6. Risk Misconception
“In Brazil we don’t have those problems…”
• World’s capital for 16 days, plus the days prior to the event
– 4.7 billion people –i.e. 70% of the world’s population- watched
the Beijing Olympics in 20081
• Internal issues on the global spotlight
• Host nation inherits the world’s problems
1 http://www.guinnessworldrecords.com/world-records/largest-tv-audience-for-an-olympic-games/

7. Mexico 1968
Tlatelolco Massacre
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• October 2nd, 1968- Student protest
ends up in bloodshed 10 days before
the Olympic Games’ inauguration
• Students were protesting against
police brutality and demanding the
establishment of a “truly democratic
state”
• The students wanted to harness the
attention focused on Mexico City at
that moment in time

8. Mexico 1968
Tlatelolco Massacre
• “No queremos olimpiadas, queremos revolución!1
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1 http://www.blackstudies.ucsb.edu/1968/mexico_photos.html
Source: http://www.adnpolitico.com/noticias/2012/09/29/tlatelolco-segun-los-periodicos-del-3-de-octubre-de-1968
Source: http://blogs.walkerart.org/design/files/2014/02/Wyman_StadiumSculpture.jpg
Source: https://en.wikipedia.org/wiki/Mexico_68#/media/File:Ex%C3%A8rcit_al_Z%C3%B3calo-28_d%27agost.jpg

9. Munich 1972
Black September
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• Early on September 5th 1972, a group
of Palestinian terrorists storms the
Olympic Village apartment of the
Israeli athletes, killing two and taking
nine others hostage
• The terrorists were part of a group
known as Black September, in return
for the release of the hostages, they
demanded that Israel release over 230
Arab prisoners being held in Israeli
jails and two German terrorists
• In the end, all 9 of the Israeli athletes
that were taken hostage were killed at
the Munich airport

10. Munich 1972
Black September
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Source: http://www2.needham.k12.ma.us/nhs/cur/Baker_00/03-04/Baker_JS_BK_3-04/berlin_munich_olympics.htm

11. Atlanta 1996
Centennial Olympic Park Bombing
111 Source: http://www.cnn.com/2013/09/18/us/olympic-park-bombing-fast-facts/
• July 27, 1996- Eric Robert Rudolph
placed a 40-pound pipe bomb, filled
with nails and screws, in Atlanta’s
Centennial Olympic Park killing one
person and injuring 1111
• In an 11-page statement Rudolph
blames the violence on the legalization
of abortion and denies that he is an
anarchist1

12. Atlanta 1996
Centennial Olympic Park Bombing
12Source: http://content.time.com/time/specials/packages/article/0,28804,1882967_1882966_1882952,00.html

13. Confederations Cup 2013
Brazil Protests
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Source: http://www.usatoday.com/story/sports/soccer/2013/06/27/protester-confirmed-dead-at-confederations-cup/2464583/
Source: http://www.thehardtackle.com/2013/confederations-cup-2013-brazil-on-and-off-the-field/

14. So what?
• Mexico and Atlanta: two domestic issues stole the spotlight
• Munich: a global/foreign affair became domestic for Germany
• Current situation:
 Political turmoil locally
 ISIS
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15. Gordon Woo’s theory
RMS’ Analysis on Terrorist social networks
Cell Size 1 2 3 4 5 6 7 8 9 10
Interdiction
Probability
0.26 0.46 0.60 0.70 0.78 0.84 0.88 0.91 0.93 0.95
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Source: http://forms2.rms.com/rs/729-DJX-565/images/TerrorismModelingPrinciples_Charlie_Hebdo_Gordon_Woo_RMS.pdf
- Gordon Woo: catastrophist and terrorism expert at RMS
- 2010 Results
- Osama bin Laden’s message: “For a large operation against the
U.S., pick a number of brothers not to exceed ten.”

16. Products Available
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17. Hiscox WTPV
• Sabotage and Terrorism: LM3030/T3
• Riots, Strikes, Civil Commotion and Malicious Damage: LMA3092,
LPO437
• War, Civil War, Insurrection, Revolution, Rebellion, Coup d'état,
Mutiny: Hiscox WTPV wording, LSW 667 (standalone)
• Terrorism Liabilities: Hiscox Terrorism liabilities wording/T3L
• Nuclear, Chemical, Biological and Radiological (NCBR)
 SRCC Extension
• Extensions available:
 Business Interruption
 Extra Expense
 Rental Income

18. Relevant facts for the Brazilian Market
Sabotage and Terrorism
• No government certification is required, if an event satisfies our
definition, then it is covered
 MST- Marxist origins with an established political agenda
• If the police or military forces get involved during a riot, definition
does not change
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19. New Terrorism Law in Brazil
Proposed definitions as of March 21st, 2016
• Motivação
“Prática por um ou mais indivíduos dos atos previstos neste artigo, por razões de xenofobia, discriminação ou
preconceito de raça, cor, etnia e religião, quando cometidos com a finalidade de provocar terror social ou
generalizado, expondo a perigo pessoa, patrimônio, a paz pública ou a incolumidade pública.”
• Atos
“Usar ou ameaçar usar, transportar, guardar, portar ou trazer consigo explosivos, gases tóxicos, venenos,
conteúdos biológicos, químicos, nucleares ou outros meios capazes de causar danos ou promover destruição em
massa” e “sabotar o funcionamento ou apoderar-se, com violência, grave ameaça a pessoa ou servindo-se de
mecanismos cibernéticos, do controle total ou parcial, ainda que de modo temporário, de meio de comunicação ou
de transporte, de portos, aeroportos, estações ferroviárias ou rodoviárias, hospitais, casas de saúde, escolas,
estádios esportivos, instalações públicas ou locais onde funcionem serviços públicos essenciais, instalações de
geração ou transmissão de energia, instalações militares, instalações de exploração, refino e processamento de
petróleo e gás e instituições bancárias e sua rede de atendimento” ou “atentar contra a vida ou a integridade física
de pessoa”.
19Source: https://www.nexojornal.com.br/expresso/2016/03/21/O-que-%C3%A9-e-o-que-n%C3%A3o-%C3%A9-terrorismo-segundo-a-lei-sancionada-por-Dilma

20. Construction risks
Standard endorsement vs. Standalone wording
• The endorsement only covers against riots, strikes and civil
commotion (SRCC)
• LMA3092 covers against SRCC+ sabotage, terrorism and
malicious damage
• The endorsement does not define perils
• Ambiguity in exclusion 2b:
“2. This insurance shall not cover any loss or damage occasioned
by or through or in consequence, directly or indirectly, of any of the
following occurrences, namely […]
b) mutiny, civil commotion assuming the proportion of or amounting
to a popular rising, military rising, insurrection, rebellion, revolution,
military or usurped power […]
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21. Nuclear, Chemical, Biological and Radiological
What’s covered?
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• Market standard definition of terrorism
• What’s covered:
 Clean up, demolition and/or
reinstatement costs
 Blast damage: partial or total loss
 Increased cost of construction
 Time Element: net income and
extra expense
• Exclusions:
 A nuclear installation from which or
at which nuclear or radiological
material is released or dispersed

22. Nuclear, Chemical, Biological and Radiological
22Source: http://bgr.com/2016/03/28/brussels-attack-dirty-bomb/
• Possible Scenario:
 Dirty Bomb
– Several reports indicating ISIS have enough
radioactive material to build a dirty-bomb
– The brothers who attacked the airport and metro
station in Brussels last month had planted
surveillance equipment outside the home of a
nuclear physicist
• Who’s buying?
 Multinationals and companies in the US and
Europe
 Companies with exposure around NYC and
Washington D.C.
 Large event organizers such as the Olympics
or the Republican Party convention

23. Terrorism Liabilities
Mumbai 2008
• November 26, 2008: several terrorist unleashed
coordinated terrorist attacks across Mumbai
• One of the targets was the Taj Mahal Palace and
Tower Hotel
• 172 people were killed in the attacks, and several
others were injured
• Will Pike, British citizen, guest at the hotel
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Source: http://www.pbs.org/wnet/secrets/mumbai-massacre-background-information/502/

24. Terrorism Liabilities
Mumbai 2008- Will Pike’s case in London
• In 2013 Mr. Pike put a lawsuit against the owners of the Taj Hotel –i.e.
Tata Group, in the UK, where the group has financial interests
• Mr. Pike said: "I do not see why the British taxpayer should have to pay for the lifelong care I
need rather than those who I believe did not do enough to guarantee my safety.”
• Mr. Pike’s lawyer Russell Levy, of Leigh Day & Co. said: “This case is about a
failure by the hotel to protect its residents and the negligence of management in failing to institute
appropriate and effective security measures to prevent terrorists from entering the hotel despite warnings
of an impending attack, or to put in place proper procedures to evacuate guests and staff safely.”
• High Court ruling on December 2013: “My estimation is that the time this case
would take to reach the probable end in India is some 20 years... about 15 years in high court,
plus five years on first appeal […][Mr. Pike] is a man who is not quite 34 years of age. A favorable
decision in England would give him the money substantially to improve his standard of living and
enable him to better come to terms with his disability when he is about 36 years of age. If the
proceedings have to be brought in India then he would be something like 50 to 55 years of age
before that occurs”
• On January 20th, 2016 David Standard, media relations manager at
Leigh Day & Co. reported: "The High Court rejected the Indian Hotel Company's
argument that the English Courts did not have jurisdiction to try the claim. Subsequently, the case
was concluded. We are unable to provide any further information."
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Source: http://www.bbc.com/news/uk-england-london-25193461
Source: http://www.standard.co.uk/news/london/man-crippled-for-life-in-mumbai-terror-hotel-plunge-sues-owners-7603308.html
Source: http://www.hindustantimes.com/india/uk-man-injured-in-2008-mumbai-attacks-wins-right-to-sue-taj-hotel/story-Ep1evyqWyGPVtuo5QoYbEI.html
Source: http://www.mumbaimirror.com/mumbai/cover-story/Brit-paralysed-in-Taj-attacks-wins-undisclosed-sum/articleshow/50661187.cms

25. Conclusions
• When countries host global events like the
Olympics, they inherit all the good and the bad that
a globalized world has to offer
• The international reinsurance market does not
require a government certification for a sabotage
and terrorism policy to be triggered
• Buying embedded coverage, whilst it may be a
practical option, it may not always get you or your
client the best cover available
• The Mumbai attacks have set precedent in
uncharted waters when it comes to terrorism
liabilities
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26. Obrigado
Questions?