Aon Risk Services 17th Political Risk Map highlights continued political and financial instability for global business in 2010, closely linked to the ongoing recession in many parts of the world.
“Rising risk levels in 2009 have led to a significant volume of credit and political risk claims in international insurance markets, which is driving many of the 18 downgrades in this year’s map,” stated Miles Johnstone, director of Aon’s political risk team.
Aon introduced two new indices on this year’s map, assessing food: agricultural commodities and water supplies.
Sam Wilkin, associate director of the consultancy practice at Oxford Analytica, explained why: “For the past 20 years, global population growth has outpaced growth in agricultural output. A run up in world food prices in 2007 and 2008 led to dramatic geopolitical events, from food riots in India to worker unrest in Cambodia. Last month, the Food and Agriculture Organization of the United Nations warned that global food prices could quickly rise again.”
He added that global warming, which affects regional climates and weather patterns, as well as the demand for bio-fuels, has created a situation where the “world faces unprecedented food and water risks.” Aon’s new indices analyze the level of global food and water insecurity.
The two new icons on Aon’s Risk Map have initially been applied to the 30 most high-risk countries, or those countries potentially facing the most severe food and water insecurity in the medium- to long-term. All of them are developing countries, mostly in Africa.
Roger Schwartz, senior vice president of Aon Trade Credit, cautioned that the Food and Water Insecurity Indices “are not meant to be alarmist. They are forward-looking assessments designed to be an ‘early warning.’ While the increasing supply-side pressures of global warming are more of a long-term issue, there are more immediate concerns.”
Aon upgraded nine countries to a lower risk level, while 18 countries saw conditions worsen leading to a downgrade in its “Movements on the 2010 Map.” The map may be ordered from Aon at: http://www.aon.com/
risk-services/political-risk-map2/index.html.
Munich Re announced that Berkshire Hathaway’s stake in the company rose to 3.045 percent on Jan. 18, worth roughly $1 billion. The world’s largest reinsurer posted a statutory notice, as required under German law, to that effect on Jan. 26.
Warren Buffett, Berkshire’s CEO, is well-placed to analyze the reinsurance industry. Berkshire already owns General Re, the world’s third-largest reinsurer and has invested 3 billion Swiss francs ($2.88 billion) in Swiss Re, the world’s second-largest reinsurer.
The Intergovernmental Panel on Climate Change has admitted that its Fourth Assessment Report contained an error — in one paragraph of the 938 page document. The IPCC stated that global warming could cause the glaciers in the Himalayan mountain ranges to disappear by 2035.
Controversy over the assertion first arose in early December, when a professor at Ontario Trent University, J. Graham Cogley, revealed that the correct date should have been 2350. It was also challenged by a report from the Indian government.
As the Himalayan mountain range contains more ice than any other area on earth, other than the polar regions — an estimated 12,000 cubic kms, or 7,500 cubic miles — and provides water to China, India and other parts of Southeast Asia, the disappearance of the glaciers that feed the rivers would be a disaster.
The IPCC acknowledged that the error was serious and had resulted from “human error,” which its peer review process failed to uncover. But it defended its overall conclusion that “climate change is expected to exacerbate current stresses on water resources from population growth and economic and land-use change, including urbanization.”
Fraud costs the United Kingdom more than £30 billion [$48 billion] a year, according to the latest annual survey from the country’s National Fraud Authority.
The finding prompted an immediate response from Nick Starling, the director of General Insurance and Health of the Association of British Insurers (ABI), who pointed out that “dishonest insurance claims alone cost around £2 billion [$3.23 billion] a year, which adds on average an extra £44.00 [$71.13] a year to every household’s general insurance budget.”
The ABI represents 96 percent of the United Kingdom’s insurers.
Topics Agribusiness Reinsurance Climate Change Aon
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