Trump’s action in Venezuela could well be the start of an ongoing set of risks for Marine/Aviation/Cargo/Oil & Gas rig insurers in the region, as other Nation States, drug cartels and activist NGOs all deploy assets in the region to prove their point. Here are some thoughts from DBRS Morningstar;
Recent geopolitical developments in Venezuela have brought renewed focus to tail risks for the global insurance sector, particularly across specialty property and casualty (P&C) lines with exposure to marine, aviation, and trade credit in the Caribbean region. While Venezuela has long been a marginal market for most international insurers, the current situation matters because it could disrupt regional transport corridors and trade routes covered by global insurers.
Key highlights include the following:
— Direct exposure to Venezuela appears limited for most international insurers, but regional spillovers matter because of increased geopolitical tail risk.
— Marine and aviation are the most immediately sensitive P&C insurance lines, with losses more likely to emerge through volatility and coverage friction than through large event claims in the near term.
— Sanctions compliance and claims enforceability are key differentiators for credit risks. Heightened sanctions and opaque counterparties can elevate the probability of coverage disputes, delayed settlements, and legal risk.
“For insurers with diversified portfolios, disciplined underwriting, and strong sanctions controls, the credit impact should remain manageable,” said Marcos Alvarez, Managing Director, Global Financial Institution Ratings. “For more concentrated specialty writers, however, current events serve as a reminder that geopolitical risk remains a persistent and potentially volatile feature of the operating environment that requires active, ongoing management.”
Read the full analysis here.
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