Not counting the cost of civil unrest

By Christophe Neves for Skyline Partners

Civil unrest on the streets of Paris in late June and early July cost businesses dearly. Companies in Tel Aviv suffered a summer of impacts from the most severe protests in a generation. Germany, Greece, and other peaceful places have seen smaller demonstrations that caused business losses. The data company DisasterAware Enterprises identified 844 discrete incidents of civil unrest world-wide in 2022. Broker WTW says Political Risk is now “everyone’s risk”.

In total, businesses must have lost billions – no one has added it all up. A lot of those companies will have insurance, but most of them will have learned the hard way that losses arising from Strikes, Riots & Civil Commotion are excluded from their coverage. A few will have insurance, mostly the bigger organisations, perhaps through a special business interruption policy that includes losses from protests and riots. However, they are very like to have discovered by now that some physical damage to their property has to have occurred before the insurer will pay up.

Other costs are almost never covered by conventional insurance. Loss of trade because you’ve been closed up for a week due to violence in the streets is unlikely to be insured. So too is the loss of perished goods, temporarily unnecessary third-party expenses, and a host of other costs that conventional insurance just doesn’t recognise as insured. If the tourist trade you rely on slumps after a summer of discontent, your insurer won’t want to know.

Parametric insurance provides a cost-effective solution. For example, Skyline Partners has created a parametric product with the international broker Howden and the insurer AEGIS which pays a fixed sum when an active shooting incident occurs near an insured business. The insurance pays the specified limit almost immediately, without the need for a time-consuming and costly adjustment process.

Skyline Partners helps insurers, brokers, companies, and affinity groups to structure and operate parametric insurance protections against risks including civil unrest, extreme weather, cyber intrusion, project delays… anything that can be observed and measured. Parametric is a new kind of insurance for a changing world, and Skyline makes it happen.

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