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From socio-political tensions to SRCC policies

We are facing "a crisis that adds to another crisis", as Kristalina Georgieva, Chief Operating Officer of the International Monetary Fund (IMF) recently stated, referring to the combined impacts of the Covid pandemic and the war in Ukraine. Announcing a downgrading of global growth prospects, she stated that rising inflation is a "clear and present threat" in many countries and that if action is not taken to strengthen food security, "the alternative is terrible: more hunger, more poverty and more social unrest, especially for countries that have struggled to escape fragility and conflict for many years ".

The concrete effects can already be seen: in recent months there have been demonstrations against the rise in the cost of fuel and fertilizers in Lima, with the consequent imposition of a curfew, and in Sri Lanka a state of emergency has been declared following protests for the economic crisis facing the country.

According to Verisk Maplecroft, an increase in civil unrest will be "inevitable in major emerging economies, and will have a knock-on impact on political stability and investor confidence". The consulting firm believes middle-income countries are the most vulnerable, because they were able to offer social protection during the pandemic, but will now have difficulty maintaining that level of spending due to the soaring cost of living.

During the Covid pandemic, demonstrations against restrictions and decrees took place around the world. Although they can be considered the response to an unprecedented series of events, these protests took place against a backdrop of growing global civil unrest.

Political polarization increased in the years following the 2008 global financial crisis and demonstrations, strikes and riots grew by 244% between 2011 and 2019 according to the Global Peace Index.

The economic damage was also significant from an insurance point of view, as reported by AGCS in a recent article. To give some examples: the mobilizations of the Yellow Vests in France in 2018 caused the country's retailers and traders to lose 1.1 billion dollars; the demonstrations against the rise in public transports prices that took place in 2019 in Chile resulted in 3 billion dollars in insured damages; in the US, the 2020 protests over George Floyd's death are estimated to have caused over $ 2 billion in insured losses.

Social media has played an important role in the growth of political and social tensions. Their low regulation has allowed disinformation to spread uncontrollably, giving space to those who wanted to convey conspiracy theories or vent their resentment. As stated in the Verisk Maplecroft report, "the protests have tarnished traditional alliances and united people of all economic and political backgrounds around specific topics. Geography is no longer a barrier: those with similar views have been able to share opinions more easily and mobilize more quickly and effectively. In a world where trust in both the government and the media has fallen sharply, disinformation could take hold and extremist views could be intensified and exploited. "

The circumstances of the Covid-related crisis may have been unique, but the influence of social media is likely to play a role in fueling civil unrest in the foreseeable future as well. Riots carry the risk of material damage to buildings and assets, business interruption, loss of attraction. Targets or victims could include government buildings, transportation infrastructure, supply chains, retail businesses, foreign-owned businesses, critical goods distribution centers, and tourism or hospitality businesses.

Companies subject to this increased risk - continues the AGCS article - should review their insurance policies and update their emergency plans. The traditional property policies in these cases offer partial coverage, while there are specialized policies to mitigate the impact of strikes, riots and civil unrest (SRCC, Strikes Riots, Civil Commotions), of which an increase in circulation is beginning to be recorded, in reason for the evolving scenarios described above.