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WTW warns standard insurance may miss non-damage losses in Lithium Triangle
WTW says operating restrictions, access controls, labor action, FX constraints, and delayed settlement often drive losses, and may not activate standard property or business interruption coverage without non-damage or political risk wording.
Insurance Business reports that a Willis Towers Watson (WTW) study warns standard insurance programs may not cover the disruptions most likely to create financial losses across Chile, Argentina, and Bolivia, known as the Lithium Triangle.
WTW’s research, conducted through the Willis Research Network with Cullen Hendrix of the Peterson Institute for International Economics, tests three scenarios, including a high-altitude earthquake in Bolivia and Argentina, an extraordinary export levy in Argentina, and an automation-driven port strike in Chile.
Across all three scenarios, WTW says physical damage is rarely the main source of financial loss. Instead, losses tend to stem from mechanisms such as operating restrictions, government-imposed access controls, labor action, fiscal intervention, foreign-exchange constraints, delayed settlement, and non-payment.
The report adds that these pathways do not always trigger standard property or business interruption coverage, and in some cases may not trigger any coverage unless specific political risk, trade credit, or non-damage wording has been arranged in advance. The scenarios cited include deferred revenue, trapped cash, contract penalties, and restricted capital movement, which the report says can sometimes exceed the cost of the physical damage itself.