Howden highlights reduced risk appetite for political violence market

International broking firm Howden says the role of broker expertise to ensure political violence (PV) cover is vital “now more than ever,” as a growing risk profile worsens market conditions.

A new report from the group says recent outbreaks of civil unrest and violence in the US, South Africa, Peru and Chile have caused insurers to tighten their risk profile as the industry continues to face challenging economic circumstances.

Howden says the value of strikes, riots and civil commotion (SRCC) claims in recent years totals a similar level of threat to the industry as natural catastrophes, with reinsurers suffering more than $US10 billion ($14.91 billion) in losses since 2015.

It attributes growing inequality grievances, cost of living disfranchisement, the economic impacts of Covid-19 and Russia’s conflict with Ukraine as elevating factors towards SRCC risks worldwide, noting a “historic reset in the standalone PV market”.

The report says rising pressures from costly claims have resulted in property insurers withdrawing from providing SRCC cover as reinsurers search for responses against a “rapidly changing threat landscape”.

It says that the stark shift in the loss profile of PV, which historically was related to terrorist attacks, has propelled a “transformational change” in the market.

“Such devastating losses have precipitated a correction in the PV market that looks set to persist for some time to come,” Howden Specialty Executive Director Tom Bradbrook said.

“Clients can therefore expect to continue to encounter difficult market conditions in 2023.”

Mr Bradbrook says SRCC and full PV cover sizes are “being cut across the board,” with global political violence insurance pricing rising by 80% within the last five years.

He says as market conditions worsen, the importance of expertise from groups such as Howden is vital to ensure the best outcomes for customers.

“With little prospect of a let up in market conditions, sector expertise, market-leading thought leadership and unrivalled relationships with insurers have never been more important,” Mr Bradbrook said.

“Howden’s PV team provides all this and more and we look forward to supporting clients in managing change and securing the best coverage available in the marketplace.”