Insurance Rates Climb After Chilean Protests
A year of civil unrest is taking a toll on insurers. Reuters reports that insurance premiums to protect shops, offices, and businesses in Chile from damage related to anti-government protests in 2019 and early 2020 have at least doubled, and in some cases they have tripled.
The Chilean government estimated that the protests—which began in October 2019 over a transit fare hike—have cost the economy $3 billion.
According to a November Insurance Insider report, estimated insured losses from riots in Chile could be up to $2 billion. Walmart is reported to have suffered approximately $500 million in damage from the riots, including from vandalism and looting. The local Walmart subsidiary said 128 of its 400 stores had been looted.
International insurers that focus on covering attacks on property or political violence were surprised by the length of the protests, particularly in a country previously considered low risk, Reuters notes. In December, Spanish insurer Mapfre said the Chilean riots—along with typhoons in Japan—would knock between €130 million and €140 million ($144 to $155 million) from its results.
Physical damage because of political protests is usually covered by terrorism or political violence insurance policies, and property insurers had been offering protection against “strikes, riots, and civil commotion” for no extra cost, especially in stable countries, according to Reuters. However, given recent strife in previously low-risk areas, some property insurers are changing course, excluding coverage for these risks from their policies.
Risks from political instability or popular uprisings continue to shift worldwide, posing layers of challenges for security managers. In the February 2020 issue of Security Management, Senior Content Manager Mark Tarallo spoke with risk managers and consultants about how organizations can address the shifting risk landscape. Tim Crockett, senior vice president of U.S. operations for healthcare and risk management firm HX Global, notes that even seemingly minor political shifts—such as a transit fare hike—can have extreme results.
“You need to know what the trouble is, and what the potential is for it to move and evolve,” he says. “As things start to grow, there can be a mob mentality as people feel anonymous within the group, and so they might do things that are a little bit over the top.”