Rioting and civil commotion across the United States has now been designated as a catastrophe event in multiple-states by PCS, the first time the industry loss data aggregator has done so in its history.
As we explained earlier this week, the ongoing situation of riots and civil commotion affecting numerous cities across the U.S. could aggregate into a reasonably sizeable loss for insurance and reinsurance carriers.
Significant damage to businesses and properties and cases of looting have continued to be reported widely through the week so far and the expectation is that costs are on the rise and as a result insurance market losses from the riots.
PCS has designated riots, or strike, riot, and civil commotion (SRCC) industry loss events before, in fact the current outbreak of protests that are now into their eighth night are the 13th time PCS has designated rioting as a catastrophe event worth tracking for its potential insurance and reinsurance industry impact.
But this is the first time that a single rioting outbreak has been designated across multiple states in the U.S. by PCS, signalling the potential for the insured losses to be much higher.
So far, PCS has designated the riots in more than 20 U.S. states. While this expansion of area covered doesn’t necessarily mean a multiplication in terms of size of loss by 20, it does imply the eventual industry loss will be higher than Minnesota alone where this began as the first state designated.
The rioting was triggered by the death of George Floyd while in police custody in Minneapolis.
What began as largely peaceful protests across the country, saw some pockets of violence has breaking out and damage to property caused. Now in their eighth night, the protests continue across the country and protesters have broken curfews widely to stay on the streets.
Violence appears to have lessened in the last night, although some reports of damage and conflicts with authorities continue.
It’s too early for any estimates of potential economic costs of the damage from the rioting across numerous different cities and locations in the U.S., so no estimates yet for the potential impacts for the insurance and reinsurance industry.
Tom Johansmeyer, Head of PCS, provided some updated colour on the situation and what it could mean for the insurance and reinsurance market.
“With riot events tending to have lower numbers of estimated claims, a few large losses (like national retailers or restaurant chains) could push the loss disproportionately higher. The 2019 riots in Chile may be instructive, as more than a third of the estimated insured loss so far comes from a handful of large retailers,” Johansmeyer explained.
He further said, “In particular, the likelihood that the riots will likely consist largely of commercial insured losses leaves the event somewhat sensitive to catastrophe claim-handling issues related to Covid-19. In some ways, many of the issues that PCS has discussed about hurricane season claim handling during Covid-19 are relevant to riot and civil disorder as well. The industry may get a sense of claim-related issues that could come to bear in the event of a major hurricane or tropical storm this season.”
The 2019 riots in Chile drove retailer specific property losses of close to $1 billion, as well as other additional claims costs, PCS had previously said.
Riots designated a catastrophe in multiple-states, a first for PCS was published by: www.Artemis.bm
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Original Article Posted at : https://www.artemis.bm/news/riots-designated-a-catastrophe-in-multiple-states-a-first-for-pcs/