DBRS Offers Thoughts on Riot and Civil Unrest Cover

DBRS Morningstar has issued some commentary on the insurance implications from the recent riots and civil unrest in France, which seems to have magically stopped after the grandmother of the youth killed by the Police made an appeal to the mainstream media. Tensions remain high however and another incident involving a person of colour is likely to spark another wave of rioting by those who identify as something other than French, irrespective of their ID card documentation. Some might say that the divisive ID politics encouraged by Western governments and mainstream media over the last decade will inevitably bring about more protests, low level street violence and fuel hatred across society in general.

So what are the consequences for all insurance brands long term, not just French insurers? Will cover have to be limited or capped for homeowners, drivers and business owners regarding riots? Here are some extracts from DBRS;

“In France, standard homeowners’ insurance policies protect against damages resulting from vandalism, including fire. Looting and theft of personal property could have a separate sublimit in most homeowners’ insurance policies.

Regarding business premises, insurers typically provide coverage on the physical damage to the premises in case of riots, but losses from looting are rarely insured. These policies may also provide optional loss of income protection (business interruption or BI) for an additional premium, while glass coverage is usually subject to separate limits and deductibles. Although BI coverage is only triggered by direct physical damage to the premises, some commercial clients opt to get additional coverage under “civil authority provisions” that provide coverage for lost income and extra expenses if police or other civil authority bars access to the property, for instance in the case of a curfew.”

DBRS notes that there is some State support available for those affected by riots, who may have had property or cars destroyed or damaged. This will limit the exposure for insurance brands. There is a strong argument that States, or agencies of the State, who provoke or inflame tensions by pitting one social, religious or ethnic group against another should pick up the tab when it all kicks off.

GLOBAL PROBLEM, OR GLOBALIST PROBLEM?

They also note that civil unrest in the USA which preceded the Biden-Harris election campaign was widespread and costly. The UK London riots of 2011 also saw many buildings burned down, plus Paris and other French cities have seen ongoing protests such as the yellow vests for some years now. Hong Kong also saw a spate of protests as China cracked down on any free speech it didn’t like in 2019 and 2020.

As a result insurers may consider changing their T&Cs if they see a wider and long term pattern of violent protests, looting and disorder. Unrest itself may have to be defined in more specific terms; what is covered and in which circumstances, or timeframe limitations.

“Given the rising materiality of recent SRCC losses, we expect that insurance and reinsurance companies will continue to apply stricter underwriting guidelines in the most conflictive jurisdictions, including reducing the availability of these coverages. Moreover, SRCC insurance will be increasingly more challenging to bundle with all-risk commercial policies, requiring the negotiation and underwriting of
separate policies.”