Demand for Cartel Insurance increases significantly across the LATAM region.
Global specialty (re)insurance group Chaucer has announced a significant increase in demand for coverage against cartel violence after a marked increase in high-profile incidents in the LATAM region. The product is available as an extension to its Strikes, Riots and Civil Commotion (SRCC) insurance.
The ‘organised crime cover’ policy covers physical damage arising from cartel activity in Mexico, Guatemala, Honduras and El Salvador.
Cartel gangs have become a huge problem for businesses across Central America. In 2018 the President of Mexico said cartels were stealing $3 billion worth of fuel every year from state-run fuel depots and pipelines*.
There has been increased demand from hotel operators as cartel activity has been occurring in major tourism centres, including centres for tourism, like Cancun that had previously been relatively untouched by cartel violence.
Gabriel Mayorga, underwriter in political violence at Chaucer says that there is strong demand for this kind of insurance both from the retail sector and from major hotel operators across the region.
Last year, the Mexican Chamber of Commerce warned that organized crime is putting Mexican businesses in more direct risk, following an arson attack by cartels on 25 OXXO convenience stores in Western Mexico**. The attack, in response to the arrest of high-profile cartel members, also saw streets blockaded by burning vehicles.
Cartels hold a significant stake in the underground economy. A 2011 report by the United Nations estimated that worldwide proceeds from drug trafficking and cross-border organized crime is equivalent to 1.5 per cent of global GDP, or $870 billion***.
***United Nations Office on Drugs and Crime