> IIUC, it's because a war would likely cause harm to a large number of clients at the same time. The insurance company could not afford to pay so many concurrent claims.
disclaimer, I know nothing about the insurance industry, but for sake of intellectual argument:
insurance companies already have to deal with scenarios like this e.g. home earthquake insurance in California.
They do this by re-selling the income and risk from their policies in the "re-insurance" market. This spreads the risk out to counter-parties (who are in the other parts of the US and the world) who buy this stream of income+risk.
In turn, those counter parties are probably buying the income+risk of all kinds of insurance policies from different geographies so any one event of earthquake or war is less likely to catastrophically affect them.
disclaimer, I know nothing about the insurance industry, but for sake of intellectual argument:
insurance companies already have to deal with scenarios like this e.g. home earthquake insurance in California.
They do this by re-selling the income and risk from their policies in the "re-insurance" market. This spreads the risk out to counter-parties (who are in the other parts of the US and the world) who buy this stream of income+risk.
In turn, those counter parties are probably buying the income+risk of all kinds of insurance policies from different geographies so any one event of earthquake or war is less likely to catastrophically affect them.