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Keith Richards and Mick Jagger are credited with having been inspired for their Rolling Stones’ famous song, initially, by observing a crowd take shelter from torrential rain. But the 60s were turbulent times and the song has often been associated with the brutalities of the Vietnam War. Merry Clayton’s last minute guest vocals “Rape, murder. It’s just a shot away” are unfortunately prevalent in Haiti today, as well as tropical rain.
Much is available in the media about Haiti’s current situation. It is important to understand that for insurance to function properly, even the worse is expected to pass and order and the rule of law assumed to return, which allows claims to be assessed and notified, losses adjusted and paid, assets repaired, and third parties compensated, economic activity to resume, allowing (re)insurers to accept premium again. Months after the current crisis began, very little, if any of that, is happening in Haiti.
The transitional council tasked in April with restoring order does not have the monopoly of force, so whilst curfews are in place and a state of emergency has been extended since March, de facto power rests largely with well-armed gangs that were once used by some businessmen for security but have taken to criminal activity such as the drug and weapons trade and hijacking of vehicles that transport food and fuel. To extend their lucrative criminal trade, gangs are infighting for territory and civilians have come under attack as victims of lootings, kidnappings for extorsion, rapes, and murders as a by-product. When gangs move into neighborhoods, police stations are vacated, courts closed, and a payment system instituted to transit the streets. Per WSJ, “those gangs have morphed from groups focused on petty crimes to organized crime syndicates that want a weak state so their drug- and arms-smuggling business flourish”[1].
Whilst ports remain closed, US Marines quietly support the guarding of only the most basic infrastructure, the Central Bank and the Port-Au-Prince airport, which has partially reopened, mostly for construction supplies to build the barracks for the much-awaited international police force that is expected to retake the streets and restore order.
Against this unfortunate, chaotic, and criminal state of events, it will be difficult to enforce many contracts of insurance at least for quite some time, let alone insureds being capable of presenting accurate claims or adjusters and other experts performing a detailed analysis.
The circumstances are so nuanced that each instance of loss, once reported, will have to be considered on its merits, and policy definitions closely scrutinised. Given the gangs are organised and reportedly military in their operations, this may be framed as an usurpation of power crisis—typically excluded under property and fire policies, but offered by other markets.
Insureds may face instances of forced abandonment, forced divestitures, and contract frustration, each of which could be excluded under traditional first party policies, and covered under political risk, political violence, or other insurance products.
[1] Kejal Vyas and Ingrid Arnesen, April 26, 2024 “Haiti’s police, outgunned and outmanned, struggle to thwart gangs”
Insurance and reinsurance