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Foo Fighters Sue Lloyd’s Over Terrorism Coverage

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Foo Fighters
The Foo Fighters said they are suing Lloyd’s of London for failing to reimburse them for scheduled concerts that were called off after the November terrorist attacks in Paris.
Loss adjuster Robertson Taylor is also part of the suit, which was filed on June 13 in federal court in Los Angeles.

The group canceled scheduled shows in Turin, Italy; Paris and Lyon, France; and Barcelona, after the Islamic State attacks because of threats, according to the Associated Press. Immediately following the Paris attacks, the Foo Fighters said, their website was hacked and the ISIS flag was displayed with an automatic weapon and a threat to “be prepared.”

The AP reported:

The band says in the suit that it believes it will be paid for the Paris and Lyon cancellations but alleges that Robertson Taylor advised underwriters against paying for canceled shows in Italy and Spain despite ISIS releasing a video threatening additional attacks in Europe.

The band is also suing the insurers for not paying for three canceled shows related to group leader Dave Grohl’s injured leg after a fall from a stage in Sweden last June.

Performers cancel shows for a number of reasons, but whether they are covered depends on details in their cancellation insurance policy. Terrorism is listed as a cause of loss by K&K Insurance. Other triggers include:

  • Power failure
  • Damages to leased or rented venues
  • Damage to surrounding venues or infrastructure resulting in lack of access
  • Natural catastrophe such as earthquake and flood
  • Adverse weather conditions (coverage is broader than rain insurance and there are no rain gauge requirements)
  • Non appearance of a principal speaker or entertainer
  • Inability to erect facilities at a venue
  • Disease outbreak (certain exclusions may apply)
  • Labor dispute/strike risks
  • Failure of TV broadcast
  • Any other previously unforeseen cause not excluded under the wording.

For more information about recent cases involving event cancellation, check out our recent article in Risk Management Magazine.

EgyptAir Flight MS 804 Crash Confirmed, Killing 66

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Egyptian authorities believe they have found debris from EgyptAir Flight MS 804, but the search remains on for the wreckage of the Airbus A320 traveling from Paris to Cairo that vanished from the radar and crashed into the Mediterranean early this morning.

According to the Greece’s defense minister, Greek controllers attempted to contact the aircraft when it crossed through the country’s airspace but could not get a response. The plane made “sudden swerves” before dropping from 37,000 to 15,000 feet and disappearing from radar. The small commercial jet was about half full, carrying 66 passengers from a range of nations, including 30 from Egypt, 15 from France, two Iraqis, and one person each from Britain, Belgium, Kuwait, Saudi Arabia, Sudan, Chad, Portugal, Algeria and Canada.

egyptair map reuters

No cause has been officially identified, but many security analysts and government officials believe that an act of terrorism may have downed the plane. There were no documented red flags before the plane disappeared: local weather was good, the plane was on its fifth flight of the day, the pilot and copilot had logged a significant amount of flying experience, and Greek aviation officials said the pilots did not mention any issues.

According to Reuters, Egyptian Prime Minister Sherif Ismail said it was too early to rule out any possible explanation, and French President Francois Hollande told reporters, “No hypothesis can be ruled out, nor can any be favored over another.” Egypt’s civil aviation minister said a terrorist attack was more likely than a technical failure, however. Two U.S. officials told CNN that the government is operating on an initial theory the flight was taken down by a bomb, but cautioned this is not yet supported by a “smoking gun.” No terrorist groups have yet claimed responsibility for the crash.

As Time noted:

Egypt has been the victim of terrorism in the skies relatively recently. Last October, a Metrojet charter plane filled with Russian tourists crashed into the Sinai Desert shortly after taking off from the Egyptian Red Sea resort of Sharm el-Sheikh, headed to St. Petersburg, Russia. All 224 passengers died in the crash. Investigators quickly speculated that a home-made bomb had been placed aboard the aircraft and in February the Islamic State, or ISIS, claimed responsibility, saying that it had indeed smuggled an explosive device aboard the aircraft.

In March, a passenger aboard an EgyptAir plane flying from Alexandria to Cairo hijacked the plane wearing a fake suicide belt, an incident that raised deep concerns among aviation authorities about the anti-terrorist measures in place on EgyptAir flights, and at Egyptian airports.

Beyond the region, a number of high-profile losses have hit the aviation industry as a whole over the past two years, including the disappearance of Malaysia Airlines flight MH370 and the crash of MH17, a Boeing 777 shot down over Ukraine. As we reported at the time, however, crashes actually continue to decrease. While the insured losses from a plane crash can be significant, the capacity in the aviation insurance market has continued to keep rates stable and relatively low.

In the terrorism insurance market, recent losses have also not yet borne out a concrete impact on rates or capacity. While some European markets have recently reduced their underwriting appetite, terrorism coverage has primarily broadened, with significant capacity and rates that remain relatively low.

As Business Insurance recently reported, the terror attacks in Paris and Brussels have prompted an increase in the take-up rate for event coverage to add to buyers’ terrorism insurance programs. Tim Davies, head of sabotage and terrorism at London specialty insurer Sompo Canopius, told the magazine that many buyers have been adding liability and event cancellation coverage, prompted by the continued relatively low rates. Despite the spike in attacks in Europe, Richard Sawyer, director and head of North American terrorism at Aon Risk Solutions, told AM Best last week that rates for terror coverage should remain relatively stable unless the frequency of attacks escalates.

A Trump Presidency Poses Top Risk to Global Economy

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According to the Economist Intelligence Unit, a Donald Trump presidency poses one of the greatest current global risks. Indeed, Trump ranks as the sixth overall potential risk to the global economy, and based on a 25-point scale, the research firm rated the risk approximately equal to the rising threat of jihadi terrorism destabilizing the global economy.

The EIU, research and analysis sister company to the Economist, ranks risks based on both impact and probability, with a Trump presidency presenting considerable potential impact, but moderate probability. The EIU’s assessment focused in particular on Trump’s hostility toward free trade (most notably NAFTA), aggressive rhetoric on China, and “exceptionally right-wing stance” on the Middle East and jihadi terrorism.

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“In the event of a Trump victory, his hostile attitude to free trade, and alienation of Mexico and China in particular, could escalate rapidly into a trade war—and at the least scupper the Trans-Pacific Partnership between the US and 11 other American and Asian states signed in February 2016,” EIU analysts wrote. “His militaristic tendencies towards the Middle East (and ban on all Muslim travel to the U.S.) would be a potent recruitment tool for jihadi groups, increasing their threat both within the region and beyond.”

The firm concluded with a prediction that, while it believes Trump will most likely lose to Democratic nominee Hillary Clinton, that probability could change in the event of a terrorist attack on U.S. soil or a sudden economic downturn.

In such a scenario, the trickle-down effect within the American political machine poses noteworthy risk as well.

“Innate hostility within the Republican hierarchy towards Mr. Trump, combined with the inevitable virulent Democratic opposition, will see many of his more radical policies blocked in Congress,” the report says.

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But “such internal bickering will also undermine the coherence of domestic and foreign policymaking.”

The firm’s overall top 10 risks by point ranking are:

economist intelligence unit top global economy risks

Brussels Bombings Highlight New Risk Realities

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Belgium map
The deadly terrorist bombings in Brussels this week have elicited an outpouring of support for the victims and for Belgium, along with renewed rage and consternation regarding ISIS. These are predictable reactions. What these acts also elicited, I’ve noticed, are numerous comments from many outlets that the attacks were not surprising.

The BBC, in fact, said the bombings were “not a surprise” and security experts chimed in with similar assessments. Even Belgians themselves admit that the attack wasn’t shocking—Prime Minister, Charles Michel, lamented that “what we feared, has happened.” Think about how much has changed in less than a generation. Now, when the capital of the EU and NATO becomes a war zone, many react as though this is business as usual.

When it comes to political violence and warfare, we (or at least Western Europe) are living in a brave new world. In fact, research I’ve conducted in recent weeks for a RIMS Executive Report on political risk confirms how much the paradigm has changed. Political risk experts I interviewed have been emphasizing this point. “I think it is truly a distinctive point in world affairs,” said one. Another confessed, “I’ve been doing this for nearly 20 years, and this is by far the most unstable, tenuous, deteriorating…risk environment I’ve ever seen.”

These sentiments are based on more than ISIS. Recent developments include the Ukraine civil war, the migrant crisis, deterioration of large swaths of the Middle East, tensions in the South China Sea, a weakening Chinese economy and Brazil’s political crisis. All contribute to a consensus that things are changing.

For the risk community, a big change is formerly reliable standards of which parts of the world are stable and which are unstable, such as developed economies versus developing and first-world versus second- and third-world. Now more than ever, risk managers considering the security of global operations need to examine a country’s vital signs rather than rely on conventional wisdom about stability. And if mass-casualty terror attacks are the new normal for Western Europe, a number of risk professionals will need to become better acquainted with the realities of political violence.

To end on a positive note, however, we do not have to believe the sky is falling. While terrorist attacks are brutal and unfortunate, it is consoling to think about the odds of being a victim. As data nerds are happy to point out, a person is much more likely to meet his or her demise from bathtubs, dogs and food poisoning. The Post has reported that you are more likely to be crushed by furniture than snuffed out by ISIS.