Taiwan – Lloyd’s of London underwriters are leading insurers in raising rates and cutting the amount of cover they offer for risks involving Taiwan as concerns grow over possible military action by China.
Insurers are on heightened alert after Russia’s invasion of Ukraine last year, which took market players by surprise and left jets stuck in Russia and ships marooned in Ukraine.
As a result, insurers have generally excluded Russia and Ukraine from policies, or increased rates.
Similar action by insurers over Taiwan – the world’s largest advanced semiconductor chip maker – would make it more difficult and expensive to do business there.
Taiwan plays a crucial role in the global economy – a Chinese invasion of Taiwan that halted chip production could potentially wipe out up to $1 trillion per year from the global economy in the first few years.
Availability of cover for Taiwan has got tighter.
Lloyd’s insurers have become more focused on how much risk they are exposed to from ships in ports in a conflict zone.
Insurers that cover war risks for aircraft are raising rates and reducing the amount of cover for issues such as confiscation.
Taiwan, which China claims as its territory, has repeatedly complained of Chinese military activity near it over the past three years, as Beijing steps up pressure to try to force the island to accept its sovereignty.
From a political risk standpoint, it’s a constant challenge and there is an underlying murmur of concern that’s there on a daily basis.
Taiwan’s democratically-elected government says only the island’s people can decide its future.
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