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June 8th 2016

KAIZEN: War Exclusion Clause

War Exclusion Clause


Welcome to Kaizen, your guide through the jump point to financial solvency. I am your host, Aaron Schere. Today’s top half of the show sets its fiscal eye on insurance. With many things in flux around the UEE, especially given the on-going war with the Vanduul, the industry’s landscape is shifting in ways you should know.

Past performance is not indicative of future results. Neither Schere, Kaizen nor Farnes Media Partners guarantees any specific outcome or profit. Before acting on information in this program, you should strongly consider seeking advice from your own financial or investment adviser.

Let’s start in the Stanton System. Ship insurance company ProtLife, a subsidiary of Stanton’s own MicroTech, has kicked off a new service allowing customers who have had their ship stolen or destroyed to accelerate the normal replacement process, for a nominal fee.

Early reports indicate that customers are responding well to the service, particularly single-ship owners and haulers — both key groups whose economic situation can be adversely affected by the delays and red tape that accompany most claims. According to an insider, if the program’s positive response continues, we should expect the service to become available to all ProtLife customers within the year.

Meanwhile, a representative from the IACA, a consumer advocacy organization, worries that monetizing the rapid replacement of ships only incentivizes insurance companies to drag their heels on standard claims, slowing the process to a snail’s pace to push loyal customers into paying extra for their replacement ship. Yet despite the concerns, buzz is building among other insurance companies, and there are rumors rival companies are considering similar services.

Speaking of insurance, let’s move on to our lead story. It’s been eight months since the Vanduul attack on Aremis, but rubble and crumbling buildings are still a common sight in certain parts of the planet. Last week, an article by Aremis Post journalist Laura Quinn highlighted a potential culprit that she attributes as the cause of the problem. Laura joins us now to explain what she found, and how it might be holding back Aremis from both an economic and an emotional recovery.

Welcome, Laura.

Laura Quinn: Thanks for having me.

So you’ve spent nearly two months investigating this issue and found that the fate of many homeowners changed once the Senate officially declared war against the Vanduul. Explain to our audience how this action has affected the rebuilding effort.

Laura Quinn: My investigation uncovered that insurance companies have been denying policyholders’ claims by invoking the ‘war exclusion clause’ that’s standard in most homeowner’s policies.

In essence, the moment the UEE Senate officially declared war on the Vanduul, insurance companies were released from any responsibility to pay those claims, leaving many Aremis residents angry and unsure how they could put their lives back together without the help they expected.

In your story, you spoke to Garret Wong, a representative from the Insurance Trade Alliance, who vigorously defended the position. How did he justify his argument?

Laura Quinn: Mr. Wong stated that the war exclusion clause was an essential part of homeowner’s insurance and had been so for centuries. Without it, insurance companies would go insolvent rebuilding worlds ravaged by war. The fear of being stuck with such a burden would lead insurance companies to deny services to any system that could potentially come under attack.

So if normal homeowner’s policies don’t indemnify homeowners that lose everything due to an act of war, what should consumers in Vanduul border systems do?

Laura Quinn: Well, Mr. Wong was quick to point out that Vanduul attacks are not uninsurable events, only that they are not covered by standard homeowner’s insurance. If they were, he argued, it would mean increased policy premiums across the Empire.

As an example, he explained how a homeowner in Angeli needs earthquake insurance in addition to homeowner’s insurance to be fully protected. Earthquakes are a natural risk specific to Angeli, and insurance companies don’t ask policyholders on Green to help shoulder that cost. The same thinking applies to anyone living in a system that borders Vanduul territory. It creates a threat specific to that location and should be insured separately because of it.

In fact, Mr. Wong recommended any policyholder living in a system near the Vanduul front should contact their local insurance agent to discuss options that provide them the proper protection.

The Senate bears some responsibility in this matter. After all, it was their declaration of war that let the insurance companies off the hook. What are they doing to solve the problem?

Laura Quinn: I spoke with Aremis’ freshman Senator Edward Aemile, who finds himself in quite the tough political position on this. If you recall, Aremis only became a recognized planet with Senate representation a month after the attack. And it was actually Senator Aemile who, during the recognition ceremony, called for a vote to declare war on the Vanduul. It was a stirring speech, but one with severe consequences for Aremis that he didn’t fully grasp.

Now, Senator Aemile has been meeting with Senators to draft a bill that would release more disaster relief funds for Aremis — a tall task for a first-term Senator representing a planet that hasn’t had a chance to establish its political weight.

Thanks for the insight, Laura. It’s definitely an issue investors should keep an eye on going forward, due to how it could affect the rebuilding efforts on Aremis as well as how it could potentially change the way their own claims are handled as the war against the Vanduul continues — especially if the conflict expands into other systems.

When Kaizen returns, we’ll do a Market Breakdown and then talk with Jerome Jesop about Cestulus’ bullish manufacturing sector. Can it maintain its momentum or is the bubble ready to burst? That, and more, after the break.


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