What's Happening?
The insurance industry is facing increasing challenges due to a rise in claims related to strikes, riots, and civil commotion (SRCC) in the United States. According to Howden Re, insured losses from SRCC events have surged from negligible levels in 2013 to over $8 billion between 2020 and 2024. The trend is attributed to growing political division and social unrest, which have led to significant property damage. Insurers are now reevaluating their coverage policies, with some excluding or restricting SRCC coverage due to the heightened risk environment.
Why It's Important?
The increase in SRCC-related claims reflects broader societal issues, including political polarization and economic inequality, which are contributing to civil unrest. For the insurance industry,
this trend represents a significant financial risk, prompting a reassessment of coverage strategies and pricing models. The situation also underscores the need for insurers to develop more sophisticated risk assessment tools to better predict and manage potential losses. The impact of civil unrest on the insurance market could lead to higher premiums and reduced coverage options for businesses and property owners.
What's Next?
Insurers are likely to continue adjusting their policies to mitigate the financial impact of SRCC claims. This may involve the introduction of new products or the modification of existing ones to better address the evolving risk landscape. Additionally, there may be increased collaboration between insurers, policymakers, and civil society to address the root causes of unrest and develop strategies to reduce the frequency and severity of such events. The insurance industry will need to balance risk management with the provision of adequate coverage to support economic stability.
