2024 is earmarked to be one of the most politically turbulent years in decades, as over 64 countries prepare to head to polling stations. Over the next few months, we will witness the most elections take place in a single year in history, with a combined population of 49% of people in the world expected to cast their vote. 

From major democracies to emerging nations, the outcomes of these votes will undoubtedly play a crucial role in shaping the future trajectory of states and nations. These changes increase uncertainty in the political risk and political violence markets and as insurers, we have a critical role in managing how corporations and governments prepare for these momentous events. 

Since 2020, the world has experienced some of history’s largest civil movements, and the lessons learnt from these are shaping the way in which corporations and governments understand behavioural patterns of social upheaval. As the world starts to experience the rising political tension from upcoming elections, the likelihood of political or social disturbances leading to property damage, business interruptions, or other financial losses for individuals or businesses becomes higher. 

As civil movements - categorised in the insurance industry as Strikes, Riots and Civil Commotion (SRCC) - have become more frequent in recent years, losses have become more costly and more concentrated, so much so that it is becoming common practice to for clients to seek standalone, specialised SRCC protection.

The goal of SRCC insurance is to mitigate the financial impact of such events by providing compensation for covered losses. In recent months, we have noticed more clients, particularly major property owners as well as those operating in the retail space, enquiring and seeking out specialised SRCC coverage.

Looking specifically at the LATAM and U.S. regions, there are a number of early indicators that suggest potential challenges in the upcoming year. The insurance market suffered significant losses of approximately $2bn due to social unrest during 2020, this resulted in significant hardening of pricing and coverage limits. 

With major elections on the horizon, we anticipate a continued shift towards a more conservative market stance, potentially limiting the availability of affordable SRCC coverage.  Underwriters may become more discerning about risk selection, particularly in cities where instability is detected. Certain areas, influenced by their internal political dynamics, may exhibit varying degrees of susceptibility to SRCC scenarios. 

Recognising the diverse regulatory environments across states, it is crucial for insurers to stay informed and adapt to potential changes in risk landscape dynamics. Now more than ever, insurance policies addressing losses stemming from civil protests and political uprisings must provide clarity and transparency. This is crucial to meet the demands of clients seeking comprehensive coverage and certainty. 

When assessing these kinds of risks, we argue that SRCC is a critical line and should be part of a comprehensive risk management program for all companies, particularly for those with high potential exposure, such as retailers. 

While there is no crystal ball to predict outcomes for the coming year, we continue to monitor indicators to assess risk for our clients as accurately as possible.  Our goal is to ensure that clients are as prepared and informed as we are ourselves. As we delve into the complexities of political and social uncertainties, particularly in the LATAM region and the U.S., and examine the lessons learned from significant civil movements since 2020, our commitment to providing comprehensive SRCC coverage remains unwavering.