Following a spate of anti-lockdown protests, Black Lives Matter demonstrations and attacks on polices forces, damages and disturbances from riots, protests and other forms of civil unrest are now among the main political risk exposures for companies in the UK and worldwide.

Political violence can cause business disruption beyond physical property damage, and the ongoing pandemic and related restrictions are further fuelling disturbances.

In the light of these developments, risk experts at Allianz Global Corporate & Specialty are warning retail companies in particular to ensure that business continuity plans are fit for purpose.

“Fortunately, large scale terrorism events have declined drastically in the last five years. However, the number, scale and duration of riots and protests in the last two years is staggering and we have seen businesses suffering significant losses,” said Bjoern Reusswig, head of global political violence and hostile environment solutions at AGCS. “Civil unrest has soared, driven by protests on issues ranging from economic hardship to police brutality which have affected citizens around the world. And the impact of the COVID-19 pandemic is making things worse – with little sign of an end to the economic downturn in sight, the number of protests is likely to continue climbing.”

Political violence led to significant insurance claims in 2020. While the protests, following the death of George Floyd, which occurred in 140 US cities over the spring, were mostly peaceful, the arson, vandalism and looting that did occur will cost the insurance industry between US$1bn and US$2bn in claims, according to Axios.

In France, the yellow vest demonstrations left many shops along the Champs-Élysées in Paris looted and heavily damaged, driving customers away. After only a few weeks of demonstrations, the French Retail Federation reported that retailers nationally had lost the equivalent of £800m in revenue.

Preparation against political violence risks is key – particularly for retailers. During two days of Black Lives Matter demonstrations in late May in Chicago, almost every storefront on Michigan Avenue, which includes the Magnificent Mile shopping district, sustained damage. Businesses need to review their business continuity plans and ensure they are recalibrated. They must cover on staff, clients, communication and social media plans.

Companies should also review their insurance policies. Property policies may cover political violence claims in some cases but insurers also offer specialist coverage to mitigate the impact of strikes, riots and civil commotion via the specialist political violence market.

“Previously this coverage was seen as a ‘nice to have’ for clients and ‘nothing to be overly concerned about’ by insurers. However, this has changed since 2018, as both the frequency and severity of these events has increased significantly. We see growing interest and demand for political violence covers from companies,” Reusswig added.

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