Rising political violence, social unrest and geopolitical risks continue to be a significant concern for organizations. While many global companies have developed sophisticated risk management programs that have long considered how best to mitigate and transfer these risks, the likelihood of their operations being disrupted by civil commotion and related physical damage and liability appears to be higher than it once was and likely to increase further.

Organizations within and beyond the insurance sector attribute the rising severity and frequency of strikes, riots and civil commotion events to the higher cost of living, which along with other social pressures has driven increased discontent. In January, the World Economic Forum ranked the cost-of-living crisis as the most severe global risk over the next two years. Associated social unrest and political instability will not be contained to emerging markets, the WEF said in its Global Risks Report.

For insurers and reinsurers, strikes, riots and civil commotion events in Latin America, Europe and North America over the past three years have led to significant payouts. So far, 2023 has offered little respite, with protests in France and Israel among the headline-making events, brokerage Howden Group reported last month. Insured losses from strikes, riots and civil commotion since 2015 have totaled more than $10 billion, versus less than $1 billion for terrorism, Howden said. 

Not all protests result in damage. On a recent trip to Paris, for example, I was fortunate not to have travel plans disrupted by pension reform protests and related transit strikes that have hit France. A walkout by students and blockade outside a high school in the neighborhood where I was staying and a so-called “casserolade” in which a small group of individuals banged pots and pans to express their discontent outside a restaurant where I was eating dinner were the only signs of unrest I witnessed.

For risk managers seeking to protect an organization’s assets, though, the raised risk profile due to ongoing social and political uncertainty has a direct impact as insurance and reinsurance market conditions have become more difficult and underwriters have reset their views of the risks. Demand for coverage is up, while supply is down, and rates are necessarily higher.

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For U.S. companies, political violence may not have been a coverage they always looked to buy. While protection was previously available through all-risk policies, many have had to reassess their coverage needs and look to buy specialty policies as property insurers have reduced limits and introduced exclusions. The rising demand for cover and trend toward restrictions appear likely to continue given the increased frequency of events and a potentially contentious presidential election looming next year.

Given the uncertainty, securing coverage that matches an organization’s risk tolerance is only one part of the equation. The other parts include how best to plan for these events and respond if they happen. Reputational risks are growing as organizations choose to speak out, or not, on a wide variety of social issues that can prompt protests, strikes and political retribution. In some countries, too, the crackdown on protesters can be especially harsh, leaving businesses and their employees at risk of being caught up in the fallout. 

Managing these changes while securing the best coverage will be a challenge for many organizations. Insurers and risk managers will need to work together to develop data and tools that can best help them assess the shift in civil unrest threats, buy protection where it’s available and take steps to mitigate the risk where it’s not.