Businesses “must think carefully about protecting themselves from a likely increase in damage” caused by growing social unrest in Latin America, mainly driven by inflation on top of the economic and social stress initially caused by COVID, said Chaucer.
Source: EPA
According to a new analysis by the re/insurer, the number of protests and riots in Latin America have increased in the last year from 3,405 to 3,617, with Colombia and Argentina experiencing the largest jumps in social unrest in the region.
Colombia saw more than a tripling of social unrest events in 2021-22, jumping from 144 to 660 – a 358% increase. Argentina witnessed a 37% spike in social unrest brought about by economic stress. The overall number of riots in Argentina increased from 140 to 192.
They have been hit hard by inflation, resulting in Governments hiking interest rates to compensate. In Colombia they went up from 2% to 7.5% in the past year and in Argentina rates surged from 20% to 50% in the past two years.
Additionally, the LatAm region was one of the hardest hit by the COVID pandemic. It struggled to contain contamination levels due to the prevalence of an informal economy, exacerbated by the limitations of countries’ healthcare infrastructure and poor social protection systems, according to the OECD.
Growing unrest in the region, driven mainly by inflation, has led to damages to property caused by protest.
Unfortunately for some businesses, Chaucer highlighted, their insurance policy may exclude this kind of damage from general insurance policies.
The insurer also noted that companies are increasingly turning to specialist Strikes, Riot and Civil Commotion (SRCC) cover, which explicitly insures against damage from riots and protests.
Businesses in higher-risk locations can use SRCC insurance to plug any gaps in their existing cover relating to social unrest, Chaucer explained.
Harriet Sharp, Head of Political Violence & Crisis Management at Chaucer said: “As COVID-19 shut down large sections of the region’s economy, Latin American countries have seen an increase in social unrest as incomes have plummeted and healthcare systems have been put under strain.”
“With recovery now hampered by global inflation and supply chain uncertainty, discontent in the region looks likely to grow for the foreseeable future.”
Sharp added: “With many Latin American countries now facing the prospect of inflation causing a cost-of-living crisis, corporates must think carefully about protecting themselves from a likely increase in damage caused by social unrest.”
Chaucer predicts that demand for insurance covering damage sustained during social unrest will continue to grow as global unrest mounts due to inflationary pressures.
