Civil unrest reducing risk appetite in political violence insurance market, Howden says


A report from insurance broker Howden has revealed that an increasingly unpredictable threat landscape has elevated strikes, riots and civil commotion (SRCC) risks and hence reduce risk appetite in the political violence (PV) insurance market.

Howden said that underlying grievances tied to inequality, the cost of living crisis and broader disenfranchisement, combined with the lasting economic effects of COVID-19 and Russia’s invasion of Ukraine, have elevated SRCC risks in both advanced and emerging economies and caused a historic reset in the standalone PV market.

For example, recent outbreaks of violence in Chile, the US, South Africa and Peru reflect a highly dynamic and interconnected risk landscape. These events saw violence spiral quickly to affect multiple locations and are indicative of rising discontent globally, as demonstrated by other incidents of unrest last year in Iran, Kazakhstan, Sri Lanka and Argentina.

According to Howden’s Report, this has reset insurers’ views of risk. Property insurers are increasingly withdrawing SRCC cover whilst risk appetite in the standalone market has reduced significantly.

The fallout represents something akin to a perfect storm: demand up, supply down, triple-digit loss ratios and reinsurance retrenchment, resulting in a market-changing pricing correction.

Further still, market pressures have been compounded further by the war in Ukraine, which in addition to causing one of the largest PV losses ever, has also exacerbated cost of living pressures and exposed other geopolitical risks that currently extend to rising tensions between China and the US.

“Conditions have unquestionably become more difficult, but few areas of (re)insurance have such an innate ability to respond to a rapidly changing threat landscape. The step-change in losses and demand will require the market to scale up considerably over the next few years: Howden is leading the charge by leveraging expertise within our group and engaging with an array of market participants to entice more capacity into the market and secure the best outcomes for clients,” the company said.

Earlier this year, Allianz reported that as strikes, riots and civil commotion around the world are expected to rise, specialist insurance can help protect companies.

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