Turkey remains low risk despite bombings

However, perceived increased risk in parts of the country may well result in higher prices and deductibles for political violence and terrorism risk in the country, a leading underwriter has predicted. With 44 people known to have died, the terrorist attack on Istanbul Ataturk Airport on 28 June proved more deadly than the March attack against Brussels Airport and the city’s metro station, which claimed 32 lives. Although no organisation has claimed responsibility, so-called Islamic State is believed to be behind the attack. The attack on Ataturk airport, the third busiest in Europe, follows a string of deadly terrorist incidents in Turkey over the past twelve months.hideAccording to UK-based political risk consultancy Verisk Maplecroft, there have been 434 terrorist attacks in Turkey over the past year. These have included two explosions at a train station in Ankara in October last year which killed at least 100 people, while in March 2016 a bombing in Kizilay Square, central Ankara, killed more than 30 people. Last week’s attack has all the hallmarks of an Islamic State strike, according to Anthony Skinner, head of political strategy at Verisk Maplecroft. As such, the attack would represent an intensification of the group’s campaign in Turkey, he added. Turkey’s security forces are having to deal with multiple security threats and face the impossible task of foiling a seemingly endless number of terrorist plots, according to Verisk Maplecroft. It not only has to contend with Islamic State, the Kurdistan Workers’ Party (PKK) and its extension, the Kurdistan Freedom Falcons (TAK), but also the extreme left-wing Revolutionary People’s Liberation Party, explained Mr Skinner. According to International SOS, domestic terrorist groups occasionally stage small-scale attacks, particularly in Istanbul and Ankara. These attacks are most often staged to cause property damage rather than casualties. However, there is a persistent risk of large-scale attacks by Islamist groups intending to cause mass casualties. “There has been an increase in attacks in Turkey over the past 12 months and the threat picture has changed, but not to the point where the risk of doing business in Turkey has increased,” said Julian Moro, regional security director for the Middle East; North, East and Southern Africa at International SOS. According to Mr Moro the January terrorist attack in Istanbul's historic Sultanahmet district on 12 January, that killed 13 people, may have signaled a change to the terrorist threat in Turkey. In that attack, thought to have been carried out by Islamic State, a suicide bomber targeted a group of mainly German tourists. In March another suicide bomb attack killed four tourists and injured at least 36 people in Istanbul. By targeting the airport, the attack is likely to be a further blow to Turkey’s tourism industry. Foreign arrivals at the Ataturk airport, the main transit point for foreign visitors to Turkey, had already dropped by 35% year-on-year in the month of May because of security concerns, noted Mr Skinner. Following the Sultanahmet district attacks, International SOS changed its risk rating for Turkey’s two most important cities, Istanbul and Ankara, from low to medium. However, Turkey as a whole is still rated as low risk, and the two cities are at the “low-end” of the medium risk rating, said Mr Moro. And while the numbers of terrorist attacks have been increasing both globally and in Turkey, this has not necessarily resulted in an increased risk for business travellers, believes Mr Moro. Mr Skinner also believes that the likelihood of a foreign company being targeted is still lower than new attacks on areas frequented by tourists or at public demonstrations. Although foreign hotel chains are highly exposed, he said. Given the attacks in Turkey, foreign investors can take precautions, according to Mr Skinner. These include bolstering security measures at entry/exit points and effectively screening new staff. However, these measures will not, on their own, suffice to prevent a determined terrorist, he added. One offsetting factor is Turkey’s robust domestic security and intelligence infrastructure, which is capable of disrupting plots, according to Mr Moro. Following last week’s attack, over 170 International SOS risk and travel manager clients sought advice on business travel to Turkey, including whether to defer travel plans. But the business risk environment is not changed by the attack, reassures Mr Moro. He believes that exposure is being driven by companies’ desire to grow in overseas markets, although many have yet to put policies in place to analyse individual profiles and travel itineraries. He also noted that, while terrorism is a growing concern for corporates, business travellers are more likely to be affected by a road traffic accident, infectious disease or medical condition, than they are to be caught up in a terrorist attack. The increased terrorist threat in Turkey has also led to greater demand for political risk insurance, according to Chris Parker, political violence, kidnap and ransom underwriter at Beazley. “The market has always seen a high volume of terrorism and political violence enquiries in Turkey, however this has increased since the attacks at Ataturk Airport,” he said. The terrorism and political violence market has historically benefited from sufficient capacity to meet the demand for coverage, but this may well change in the short term as underwriters' appetite to assume additional exposure in the more volatile parts of the country decreases, predicted Mr Parker. “This may have an effect on pricing for certain high risk asset types in the more volatile locations as underwriters scale their line sizes back or actually decline to offer any form of coverage. We may also see an increase in the physical damage and business interruption deductibles on placements back to a level that is more reflective of the risk,” he told CRE.

Turkey remains low risk despite bombings

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Allianz sells its 51% stake in Allianz Saudi Fransi

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Allianz sells its 51% stake in Allianz Saudi Fransi

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Energy insurer Paratus launches brokerage division

Allianz sells its 51% stake in Allianz Saudi Fransi

Related Articles