What Next for Somalia?

12 August 2010

Why are more companies looking for international insurance in Somalia? Ed Watling, a Global Benefits Consultant at Bellwood Prestbury, considers what might be attracting the increase in interest.

Somalia has been without an effective central government since President Siad Barre was overthrown in 1991. Years of fighting between rival warlords and an inability to deal with famine and disease have led to the deaths of up to one million people and a country which is generally viewed as a “failed State”. So why are more and more companies approaching Bellwood Prestbury for quotes for Somalia insurance?

Somalia was created in 1960 when a former British protectorate and an Italian colony were merged. Since then its development has been slow. Relations with neighbours, Ethiopia, Kenya and Djibouti, have been soured by its territorial claims on areas inhabited by ethnic Somali people.

In addition, the hostile action against UN peacekeeping forces in the 90’s (including the infamous “Black Hawk Down” incident) and continuing pirate activity off the coast helps to give the perception that Somalia is one of the most unstable and dangerous areas in the world today.

However the picture isn’t totally negative. In May 2010 UN Secretary General, Ban Ki-moon, called on the world to support the current Somali government as the best hope for positive progress and stability. There are major UN initiatives in Somalia aimed not just at peace keeping (mainly using African Union troops) but also providing food aid, road building, water management and general infrastructure.

Stabilising the country, especially the capital Mogadishu, will be difficult but could be rewarding – and not just in humanitarian terms.

Since 1991, the north-west part of Somalia, which unilaterally declared itself the independent Republic of Somaliland, has enjoyed relative stability. The territory, whose independence is not recognised by international bodies, is believed to have the potential to produce between 5 billion and 10 billion barrels of oil. US, Australian and Chinese oil companies have already expressed an interest in the area.

Further south there are valuable, unexploited uranium deposits, which have proved interesting to Brazilian and Russian mining companies.

Although Somalia is far from safe, the potential for development is encouraging. International aid agencies and businesses (Coca-Cola, General Motors and Dole Fruit) are already working there and 14 airlines now fly to 62 destinations from Somali airports. The number of expats working in the country is growing.

Working in a country like Somali is always going to be challenging (both the US and UK Governments currently advise against any travel to Somalia, August 2010). Any company planning to employ staff there needs to ensure that their international employee benefits will meet the needs of the staff and the company.

Global Life and Accident Insurance 

Most international group life insurance policies will not be valid in respect of prolonged visits or work in Somalia. In many cases the insurer may only be willing to offer “natural causes only” cover, because of the potential for violence in Somalia. To get comprehensive cover, Bellwood Prestbury often organises Personal Accident policy issued by Lloyd’s of London to cover death by non-natural causes including acts of war and terrorism.

Emergency Medical Evacuation Insurance

Healthcare in Somalia is extremely limited. There is virtually no state provision and even private medical facilities are scarce (currently the ratio of doctors to patients is 1:25,000).

Once again specialist international health insurance needs to be carefully chosen so that employees working in Somalia are fully covered for the effects of war or terrorism (many policies have passive war exclusion clauses). In addition it is essential that the policy provides comprehensive medical evacuation and/or repatriation cover. In case of medical emergency most insurers will use their assistance company to evacuate the insured to the superior medical facilities in Kenya or South Africa.

Kidnap Insurance

Political situation in Somalia leaves expats at risk of kidnap by any of the politically or criminally motivated factions. In recent years aid workers, journalists and sailors have been subject to kidnap. The taking of hostages by Somali pirates is well publicised in the western press but foreigners are at risk throughout the country. It is possible for companies to insure against this risk with a Special Contingency Policy (Kidnap Insurance).

These policies not only help towards the cost of ransom payments but also provide access to highly experienced consultants who will assist in negotiations and often have “on the ground” contacts not normally available in usual business environment.

Bellwood Prestbury has many years experience in providing Somalia insurance for companies and individuals, and cover for other hostile regions. For further details please contact Ed Watling.

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