Businesses should prepare for a rise in civil unrest incidents as the cost-of-living crisis follows hard on the heels of the Covid pandemic, says insurer Allianz Global Corporate & Specialty (AGCS).
Strikes, riots and violent protest movements pose risks to companies because, in addition to buildings or assets suffering costly material damage, business operations can also be severely disrupted with premises unable to be accessed, resulting in loss of income, said to AGCS.
“Civil unrest increasingly represents a more critical exposure for many companies than terrorism,” says Srdjan Todorovic, head of Crisis Management, UK and Nordics, at AGCS
“Incidences of social unrest are unlikely to abate any time soon, given the aftershocks of Covid-19, the cost-of-living crisis, and the ideological shifts that continue to divide societies around the world.
“Businesses need to be alert to any suspicious indicators and designate clear pathways for de-escalation and response, which anticipate and avert the potential for personnel to be injured, and or, damage to business and personal property.”
Last year’s riots in KwaZulu-Natal and parts of Gauteng, which followed the arrest of former president Jacob Zuma, were fueled by job lay-offs and economic inequality causing damage worth $1.7 billion, according to AGCS.
The South African Special Risk Insurance Association (SARIA), the state-managed entity that provides cover for riots and other civil violence damages, has warned that it is unable to cover businesses across the country should it see a repeat of the July 2021 riots.
AGCS said that targets of civil unrest or collateral damage arising from it could include government buildings, transport infrastructure, supply chains, retail premises, foreign-owned enterprises, petrol stations, distribution centres for critical goods and tourism or hospitality businesses.
How much civil unrest costs a country
AGCS said economic and insured losses from previous protests have been significant, creating large claims for companies and their insurers.
Last year’s riots in KwaZulu-Natal and parts of Gauteng, which followed the arrest of former president Jacob Zuma, were fueled by job lay-offs and economic inequality causing damage worth $1.7 billion, the insurer noted.
AGCS added that countries across the globe have been facing a rise in unrest over recent years:
In 2018, the Yellow Vest movement in France rallied to protest fuel prices and economic inequality, with French retailers losing $1.1 billion.
In 2019, large-scale demonstrations were sparked in Chile by increased subway fares, leading to insured losses of $3 billion.
In 2020, US protests over the death of George Floyd in police custody resulted in estimated losses of over $2 billion in insured losses.
Earlier this year, in Canada, France and New Zealand, demonstrations against Covid-19 restrictions included convos of vehicles disrupting major cities.
“Companies should review and update their business contingency plans if necessary, considering any supply chain vulnerabilities. They should also review their insurance policies in the event of increasing local unrest activity,” noted AGCS.
Property policies may cover political violence claims in some cases, but insurers offer specialist coverage to mitigate the impact of strikes, riots and civil commotion (SRCC), said AGCS.
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