The last two years have been particularly turbulent, according to the report. The COVID-19 pandemic has had economic impacts across the world; the death of George Floyd sparked civil unrest across the US and beyond; and there has been increasing general unrest in many countries – most recently Colombia and South Africa.
The social and political upheaval impacting much of the world means that multinational companies face a challenging risk landscape, Chubb said. Traditionally, insurers have offered SRCC coverage at no extra cost. However, the increased frequency and severity of SRCC risks means that this is changing; many property insurers have begun excluding social unrest from policies.
With this in mind, risk managers need to ensure that SRCC-specific insurance programs are in place to protect their balance sheets and assets, the report said.
“Episodes of social unrest in Europe, the Americas and Asia are rarely out of the news,” said Piers Gregory, head of terrorism and political violence at Chubb Overseas General and co-author of the report. “As a result, we have all been able to see how isolated protests, demonstrations and other SRCC-type events can easily evolve into extended periods of upheaval. The causes and consequences of such events are many and varied, and, as a result, they have put the complex issues of insurance coverage under the spotlight.
“Now more than ever, insurance policies covering losses caused by civil protests and political uprisings need greater clarity and transparency to provide the coverage and certainty that clients demand. It is critical for companies to understand the limitations and exclusions which can affect the coverage of SRCC losses, as well as the specific risk exposures during events of civil unrest that will have an impact on their contracts. The purpose of this report is to reduce uncertainty, mitigate the risk of contested claims, and to ensure that risk managers, their businesses and assets are protected adequately through clear and understandable SRCC insurance covers.”
“Recent civil unrest events have brought into sharp focus the interpretation and application of traditional civil unrest perils typically seen in insurance policies,” said Patrick Foss, partner at Kennedys. “As always, clear policy drafting is of utmost importance, and both insurers and policyholders alike must carefully consider the terms of their policies and how they are likely to respond to various scenarios.
“This report is a timely reminder of the dynamic risk environments policyholders operate in and the consideration that must be given to the insurance arrangements they have in place for those operations.”