PV losses rival or surpass natural catastrophe losses in some regions
Insurance losses from strikes, riots and civil commotion (SRCC) in certain territories are now comparable to major natural disasters, according to a new report by Howden.
Grievances about inequality, the cost-of-living crisis and broader disenfranchisement, in concert with the continuing economic fallout of COVID-19 and the war in Ukraine, have elevated SRCC risks in advanced and emerging economies alike and caused a reset in the standalone political violence market, Howden reported.
Recent outbreaks of violence in the US, Chile, South Africa and Peru spiralled to affect multiple locations and were indicative of a rising tide of discontent across the globe, Howden said. Protests in France and Israel have also made headlines in recent weeks.
This rising tide of unrest has caused insurers to reevaluate their view of risk, the report found. Property insurers are increasingly withdrawing SRCC coverage, and risk appetite in the standalone market has plummeted. What Howden called a “perfect storm” – rising demand, falling supply, triple-digit loss ratios and reinsurance retrenchment – has led to a market-changing pricing correction.
The war in Ukraine has also compounded market pressures. The war has caused one of the largest PV losses ever, while also exacerbating cost-of-living pressures and exposing other geopolitical risks, including rising tensions between the US and China.
