According to Mohit Pande, Chief Underwriting Officer of Property at Swiss Re, the impacts of Strikes, Riots, and Civil Commotion (SRCC) are at an all-time high, underscoring the urgent need for effective risk management and mitigation strategies within the re/insurance industry.
Pande states, “From the French riots in 2023 to the Black Lives Matter movement in 2020 and the Chilean riots a few years prior, we have seen a massive escalation in SRCC events, resulting in significant loss spikes.”
The Carnegie Endowment for International Peace’s Global Protest Tracker reports that over 132 countries have experienced protests since 2017, with 23% lasting more than three months.
Swiss Re observed a 3000% increase in SRCC-related claims worldwide from 2000 to 2020.
In response, Pande suggests the re/insurance industry must do more to address this growing risk. Properly assessing and pricing SRCC risk is crucial and should be continually improved.
Pande explains, “Exposures must be considered, assessing everything from geographical value distribution, exposed occupancies and locations to recent socio-political developments and previous SRCC loss experiences.”
He continues, “Coverages also need to be considered, looking at silent coverage versus explicit extensions, and the extent of specific provisions such as exclusions or limitations. Here we are working with clients to ensure contract certainty and implement clauses to help contain the risk whilst also providing adequate coverage to their clients.”
The industry also needs better models to manage accumulation risks and identify exposure concentrations within specific areas or industries.
Furthermore, the industry must better capture SRCC-specific exposure data and ensure it is integrated throughout the re/insurance value chain. Swiss Re is assisting clients by providing data insights to highlight accumulation issues, especially in vulnerable areas.
SRCC risk exposure also needs to be clearly and transparently defined in contracts to establish boundaries for certain risks, making improved contractual wording essential.
Efforts should include revisiting the definitions of SRCC in contracts to avoid covering anything outside expected parameters. While it is challenging to draw exact lines, transparent and accurate definitions can help distinguish between events like riots and terror incidents.
“We must prepare for a world in which potential centres of SRCC break-out have multiplied and can spread more quickly and widely. As social economic factors increase the magnitude of loss and the unpredictability of the risk, it’s paramount that the industry leverages data and technology to manage this growing risk through improved exposure assessment, adequate risk pricing, better accumulation control and clear contractual wordings,” Pande concludes.
