Terrorism in Africa has become a reality that businesses have to consider in their risk planning. In terrorism risk planning, the size of the business does not matter. This is evidenced by the attack on Westgate Shopping Mall in Nairobi where even delivery vehicles for small and medium enterprises suffered the damage when the building was bombed to flush out the al-Shabaab terrorists.
Personal assets were also damaged but luckily, some insurers offered a relief to the asset owners who did not have terrorism cover in their main insurance by offering compensation for losses. Terrorist groups like the al-Shabaab have created active and semi active cells across East Africa. Boko Haram in Nigeria has meanwhile extended its operations to Cameroon. In North Africa, several al-Qaeda affiliated terrorist groups are active while in Central Africa region, rag-tag armies and groups, including the Lord’s Resistance Army continue to terrorise communities.
This means more businesses in Africa are exposed to terrorism either in their countries of origin or in countries that they are likely to be doing business in. It is, therefore, crucial that terrorism insurance becomes part and parcel of business risk planning.
Today, there are more insurance companies that offer terrorism insurance cover. In other countries, capacity for insurers to cover risk is still being developed.
Unlike most natural catastrophes, there is no prediction model for terrorism. This makes it a big challenge to appropriately predict the risk of terrorism.
It is time African governments worked with local reinsurance companies to find means of addressing the growing risk of terrorism and its threat to businesses.
SOURCE: Daily Monitor