Insuring cluster bombs

There’s a lot to applaud in Aviva’s recent decision to stop investing in twelve arms manufacturers who failed to confirm to the insurer’s investing arm that they were not involved in the production of cluster bombs or their key components. The Aviva spokesperson summed it up nicely in a comment about funding a company manufacturing cluster bombs being as wrong as manufacturing them in the first place.

The obvious question this then raises from the perspective of ethics and insurance is whether insurers like Aviva have implemented a similar ban on their underwriting of manufacturing and distribution facilities used by those same twelve arms manufacturers. If this isn’t in place, or at least on the horizon, then Aviva and all other commercial insurers and reinsurers need to get their act together and do something about it now. Insuring them is as wrong as manufacturing them.

There’s an international convention banning the use, production, transfer and stockpiling of cluster bombs and the UK has ratified it, as have countries like Germany and France. While there may be question marks hanging over the rules around investing in companies connected with cluster bombs (and presumably around insuring them too), this is a clear no-brainer from an ethical standpoint. Aviva have quite rightly followed the spirit of the convention by stopping investing in their manufacture.

Some of these arms manufacturers are huge corporations employing many tens of thousands of people around the world. They may not be the type of commercial risk that Aviva normally underwrites, but they will be the type of risk that the Lloyds market and the big German and French reinsurers look at on a faculative basis. Instituting such an underwriting ban may not be easy, but then neither is the underwriting of complex manufacturing supply chains.  It could be highly effective, for lack of insurance cover puts a business at greater risk than lack of investment. All in all, it will be worth the effort

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