Civil unrest: Property damage may be excluded

The number of protests and riots in the MENA (Middle East & North Africa) region has jumped by 45 percent in the last year*, from 19,677 to 28,458 incidents, according to new analysis by specialty (re)insurance group Chaucer.

Chaucer has said in a statement that the increase in protests in the region has been largely driven by the economic and social stresses caused by the pandemic, according to research by OECD. For example, the collapse in oil and gas prices during the lockdown was a contributing factor to an increase in protests in a number of economies in the region that are dependent on oil and gas revenues. In April 2020, prices reached a low of USD25 a barrel.

In the Middle East over the last year, Lebanon, alone, experienced 2,695 incidences of unrest. In North Africa there was a 39 percent rise in protests and riots; Algeria saw an increase of 11 percent, from 2,250 to 2,490, South Sudan incidents increased from 608 to 844 and Tunisia saw incidents double from 989 to 1,986 with protests over the government’s handling of the Covid-19 outbreak largely driving the increase.

The growth in unrest in the region has led to damages to property caused by protests. Unfortunately for some businesses, their general insurance policies may exclude this kind of damage and some businesses may have experienced difficulty in obtaining cover for protest and riot damage.

Increasingly, companies are turning to specialist SRCC (Strikes, Riots and Civil Commotion) cover, which explicitly insures against damages from this type of event. Businesses including banks, retailers and real estate funds in higher-risk locations are able to use SRCC insurance to plug any gaps in their existing cover relating to civil unrest.

Fawzi Omari, senior executive officer at Chaucer’s Dubai office, said: “The economic shock of the pandemic has been felt especially hard in certain parts of the MENA region. We are working closely with our clients to ensure they have the right coverage to protect their assets.

Since the global financial crisis Strikes, Riots and Civil Commotion has been growing as separate area of insurance in order to help deal with the trend for general property insurance policies to exclude the risk. It looks like COVID-19 is going to accelerate that process. Otherwise rising unrest could leave businesses who lack the right insurance exposed.”

*Year ending April 30 2021. Analysis of data from the Armed Conflict Location and Event Database.