If you think the world is becoming more turbulent and disruptive, you’re right. Civil unrest has doubled in the past decade as protests ranging from economic hardship to police brutality ravage cities around the world. The Covid-19 pandemic is making things worse.

With national flags flying among banners and placards promoting conspiracy theories, the mob quickly overwhelmed police barriers and stormed the steps of the legislative building. Hundreds were arrested. This wasn’t the 2021 insurrection of the US Capitol, but a demonstration that drew 40,000 people to protest Germany’s coronavirus lockdown.

The German riot echoed protests in Hong Kong a year earlier when hundreds broke into the Legislative Council, spray-painting messages on walls and breaking glass. Around the world, citizens are protesting more – and increasingly such protests are turning violent.

Data from the Global Peace Index 2020 [1] show civil unrest has doubled around the world over the last decade with the numbers of both non-violent and violent demonstrations rising sharply. Riots increased by 282% in the last decade and violent protests occurred in 58% of countries during 2019 – a development that reflects a longer-term trend. On the positive side, the death toll from terrorism continued to fall, with just over 8,000 total deaths recorded in 2019, down from a peak of 33,555 in 2015 [2].

“Fortunately, large scale terrorism events have declined drastically in the last five years,” says Bjoern Reusswig, Head of Global Political Violence and Hostile Environment Solutions at AGCS. “But specialist political violence has risen instantly and seamlessly to take their place as a significant risk.”

Civil unrest incidents are becoming the main political risk exposure for companies, as reflected in the findings of the Allianz Risk Barometer 2021, in which ‘political risks and violence’ returned to the top 10 risks for the first time since 2018. The number, scale and duration of such incidents in the last two years is staggering, says Reusswig, adding the extreme aspects of the French “yellow jackets” protest movement has inspired other groups. “The ‘yellow jackets’ did not stop,” says Reusswig. “Driven by social media, they continued, eventually turned violent and were partially successful. People took notice and they became a negative role model for demonstrations globally.”

  • Number of non-violent and violent demonstrations rising sharply. Riots have increased by almost 300% in the last decade
  • Over 70 countries expected to see an increase in protests over next two years
  • Businesses do not have to be direct victims of civil unrest to suffer financial losses. Review insurance to check coverage
  • Growing awareness among C-suite of the need for business continuity planning to address disturbances
Throughout 2019, “yellow jacket” demonstrations drew some 300,000 people, constructing barricades and blocking roads, and turned increasingly violent with 2,000 protestors and more than 1,000 police reportedly injured. Meanwhile, demonstrations throughout the US in 2020 are estimated to have caused $1bn in damages, although the final cost could reach $2bn, according to Property Claim Services (PCS), a company that has tracked insurance claims relating to civil disorder.
The scale and extent of civil unrest is blurring the lines between when the general riot cover of property policies become political in nature. This can place such events outside the scope of standard insurance and may lead to damages caused, for example, as a result of a political protest being rejected. Specialist political violence insurance (PVI) covers the impact of civil commotion, strikes, riots, and terrorism plus physical damage incurred during a process of mass social uprising, revolt or military coup. It is in increasing demand after the events of the last two years.
  • Unfortunately, the risk of riots and violence is likely to become more acute, thanks to the Covid-19 pandemic, says Michael Stone, a Mid-Corp Risk Consultant for AGCS. The measures governments have used to combat the coronavirus have had a significant socioeconomic impact and frustration is growing in large population segments.
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  • The International Labor Organization (ILO) estimates that 8.8% more global working hours were lost in 2020 than in 2019 – the equivalent of 255 million full-time jobs [3]. According to a Pew Research study [4], 15% of US adults interviewed had lost their work because of Covid-19 and one-in-four had trouble paying bills since the outbreak.
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  • The impact is particularly evident in the US, where the social safety net is not as comprehensive as elsewhere, explains Stone. “People are concerned. Job, health and income security are all gone. They’re more likely to demonstrate and have a shorter fuse, so it isn’t surprising that anti-lockdown demonstrations can turn violent.”
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  • Covid-19 has both magnified underlying long-standing grievances and given them a focal point. The pandemic has also negatively affected political stability, increasing polarization and bringing into sharp relief issues surrounding equality, worsening labor conditions and civil rights.
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  • With no end to the pandemic-induced economic downturn in sight, protests are likely to continue climbing. Verisk Maplecroft, a leading research firm specializing in global risk analytics, expects 75 countries to experience an increase in protests by late 2022[5]. Of these, more than 30 – largely in Europe and the Americas – will likely see significant activity. And when emergency spending by governments ends in the post-pandemic period, the economic fallout is likely to reverberate for years, ensuring a tumultuous decade ahead.
Civil unrest is not a natural disaster. It can be prepared for. This involves three phases: plan development, physical preparation and response and mitigation. Bradley Jones, Manager of Mid-Corp Risk Consulting North America at AGCS and Scott Steinmetz, Regional Head of Mid-Corp Risk Consulting North America at AGCS, have authored a short paper providing the essential information businesses need to brace themselves for civil unrest.

Conducting business in a time of civil unrest can be hazardous. Bradley Jones, Manager of Mid-Corp Risk Consulting North America, for AGCS, explains that business insurance covers damage to property and contents when the cause is fire, looting or vandalism caused by civil commotion, protests and riots. But businesses do not have to be direct victims of civil unrest to suffer financial losses.

Revenues can suffer if the surrounding area is cordoned off for a prolonged time or while infrastructure is repaired to allow reentry of customers, vendors and suppliers. For example, during the “yellow jacket” demonstrations, shops along the Champs-Élysées were looted and heavily damaged, which drove customers away. After only three weeks of demonstrations, the French retail federation reported that retailers nationally had lost $1.1bn in revenue. Bruno La Maire, the French Finance Minister, described it as a “catastrophe for our economy.” (6)

Jones explains that one of the most important steps businesses can take in preparing for civil unrest is to check insurance policies. In addition to losses incurred by civil disturbances, standard property policies may cover income loss caused by a riot or civil commotion. This includes if a business is forced to suspend operations or limit hours due to rioting. However, some policies are only triggered if the premises are physically damaged.

“This can vary from country to country and by line of business, but it means reimbursement for a loss of business or interruption is only triggered if the business actually sustains a physical loss or damage, such as looting, broken windows or in-store destruction,” explains Jones.

During two days of “Black Lives Matter” demonstrations in late May in Chicago, almost every storefront on Michigan Avenue, which includes the “Magnificent Mile” shopping district, sustained damage. Later in the summer, looters – some who may have hired vans for the occasion – flooded to the rich central districts of Chicago and smashed into luxury-goods, electronics and other shops. Cash dispensers were pried open, cash registers seized and carloads of fancy clothes, jewelry, televisions and alcohol hauled away.

“In many cases, businesses not directly affected by those disturbances would not have sustained a covered loss,” says Jones, “even though they may have suffered a significant decrease in sales resulting from the incidents. If businesses find their insurance does not cover such losses, then they may want to review their policy with their insurer or broker.”

  1. Chile: Starting as a fare evasion campaign in October 2019 after an increase in the Santiago Metro subway fare, the movement swept the nation. Confrontations with police and infrastructure vandalism resulted in damages of $2bn.
  2. Ecuador: A series of protests erupted in 2019 in response to austerity measures introduced by the government, including the cancellation of fuel subsidies. The demonstrations paralyzed the country and caused $800mn in damages.
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  4. France: After only three weeks of "yellow vest" demonstrations, the French retail foundation reported retailers nationally had lost $1.1bn in revenue. 
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  6. Hong Kong: A proposed bill to allow extradition of citizens to jurisdictions such as mainland China and Taiwan sparked violent demonstrations from March 2019 into 2020. Damages are estimated at $750mn.
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  8. United States: Throughout 2020, demonstrations often turned violent, including those by “Black Lives Matter” and anti-lockdown campaigners, as well as protests surrounding the national elections. Damage – $1bn+.

Jones recommends that businesses review their business continuity plans. Typically, these only focus on national catastrophes, but there is a need for BCP plans to address political disturbances and other types of business disruption like cyber. “There is growing awareness of this in the C-suite as the situation is not likely to change in the foreseeable future,” says Jones.

While the successful rollout of vaccines may help calm the situation worldwide, Stone does not believe this alone will see the risk of civil disturbances and riots decline again. “I don’t think there is any putting that evil genie back into the bottle until civility reenters public discourse,” Stone comments.

Reusswig is concerned that the pandemic has enabled conspiracy theories to flourish in large parts of the population. “That has become reality to an extent I never imagined was possible,” says Reusswig, adding that it, “has prepared the ground for future turbulence. As underwriters, we are working to understand the dynamics of such situations. At the moment, we can’t predict when a demonstration will turn into a riot, but we need to gain a better understanding of what the triggers are. If we can answer this, it has huge implications for the insurance industry in terms of the impact of the magnitude of losses.”

There are various types of insurance available to cover different political risk scenarios. Regardless of which type is selected, all political violence and terrorism insurance types include the following main coverages:
Property coverage
  • Physical damages/losses sustained
BI/CBI coverage
  • Denial of access due to civil or military authority; supply chain issues; reduction to gross earnings suffered due to the necessary interruption of a business‘ operations; and expenses incurred in attempting to reduce loss or increase operations elsewhere
Political violence insurance
  • Malicious damage: Physical loss/damage resulting from a malicious political act committed during a public disturbance
  • Insurrection, revolution and rebellion: Deliberate, organized armed citizen/subject resistance to a sovereign government’s laws
  • Coup d’état; mutiny: Sudden, violent and illegal overthrow of a sovereign government; resistance by members of legally armed or peace-keeping forces to a superior officer
  • War; civil war: Conflict between two or more sovereign nations, declared or undeclared; a war carried out between or among opposing citizens of the same country or nation
Standalone strike, riot and civil commotion insurance
  • Strikes: Any willful act of any striker/locked-out worker during a strike; any act of a lawful authority to suppress or minimize the strike’s consequence
  • Riots, civil commotions: Any political act committed in the course of a disturbance of the public peace by a group of persons; any act of a lawful authority’s act to suppress or minimize a riot
Standalone terrorism and sabotage insurance
  • Act of terrorism: An act or series of acts, including the use of force or violence, by any person or group(s) of persons whether acting alone or on behalf of any organization(s) committed for political, religious or ideological purposes
  • Sabotage: Any willful physical damage or destruction perpetrated for political reasons by known or unknown person(s)
Note: “Full” political violence insurance includes all of the above. Coverage for any of the above could include physical damage, BI, (CBI), denial of access, delay in start-up and advanced loss of profit for construction projects.

[1] Global Peace Index, Vision of humanity, June 2020
[2] Global Peace Index
[3] International Labor Organization (ILO), ILO Monitor, Covid-19 and the world of work, January 25, 2021
[4] Pew Research, Social trends 2020: Economic fallout from Covid-19 continues to hit lower income Americans the hardest, September 2020
[5] Verisk Maplecroft, A dangerous new era of civil unrest is dawning in the United States and around the world, December 10, 2020
[6] New York Times, In Paris, ‘yellow vest’ protests cut sharply into city’s luxury trade, December 17, 2018

Title photo: Wikimedia Commons

This article is part of the our Global Risk Dialogue. Appearing twice a year, Global Risk Dialogue is the Allianz Global Corporate & Specialty magazine with news and expert insights from the world of corporate risk.
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