A recent report from Allianz Commercial highlights growing concerns surrounding the surge in elections scheduled for 2024, which could potentially escalate the risks of political violence and result in significant insured losses.
Srdjan Todorovic, Head of Political Violence and Hostile Environment Solutions at Allianz Commercial, emphasises, “So many elections in one year raise concerns about the fuelling of polarisation, with tensions potentially playing out in heightened civil unrest. Polarisation and unrest within societies are fuelled by fear. They undermine trust in institutions and challenge people’s sense of a common purpose built on shared values.”
The economic and insured losses stemming from just seven incidents of civil unrest in recent years amounted to approximately $13 billion. Consequently, given the unprecedented ‘super-cycle’ of elections in 2024, multinational corporations are increasingly interested in obtaining political violence insurance coverage to mitigate their risks.
Particular attention is focused on the United States due to the presidential election scheduled for November 2024, which carries the potential for substantial insurance losses.
Allianz reports that more than one-third of Americans doubt the legitimacy of President Biden’s 2020 election victory. This widespread scepticism can be exploited through misinformation spread on social media, including deepfakes, repurposed imagery, and tailored messaging, potentially inciting unrest or influencing voters.
Furthermore, the report highlights that the European Parliament elections in June could deepen existing divisions, with the potential for populist or far-right parties to gain votes and seats due to recent trends.
Todorovic comments on the ramifications of a political shift to the right: “They fundamentally change societies and public attitudes and make the next electoral shift to the centre or left seem drastic, creating the potential for schisms and potentially violent responses from those who feel underrepresented by a regime change.”
Moreover, Allianz underscores the anticipated rise in incidents related to environmental activism and terrorism threats. Consequently, businesses are expected to encounter heightened challenges in the coming years, further emphasising the need to mitigate these evolving risks.
Political violence activity can impact businesses in various ways. Those in the immediate vicinity of unrest may suffer material damage to property or assets and business interruption losses, while indirect damage can be inflicted on companies in the form of diminished attractiveness or restricted access to their premises.
Todorovic emphasises businesses’ need for political violence insurance within a volatile political environment, stating, “Businesses need to protect their people and property with forward planning, such as ensuring safe and robust business continuity planning is in place in the event of an incident, increasing security, and reducing and relocating inventory if likely to be impacted by an event.”
He adds, “Using scenario planning and tracking risks in areas key to their operations can raise businesses’ awareness of where political violence and civil unrest risks may be intensifying. Companies should also review whether their insurance policy covers the impact of risks such as strikes, riots, and civil commotion.”
