Social Unrest in France Will Add to Ongoing Concerns in the Strike, Riot, and Civil Commotion Insurance Market

DBRS Morningstar published a commentary discussing the implications of the riots in France on the local insurance industry and the global strike, riot, and civil commotion insurance (SRCC) market.

Key highlights include:

• Total insured losses due to the riots should be manageable for the French insurance industry given the existence of reinsurance and the partial liability of the French state.

• Rising frequency and materiality of SRCC losses will maintain upward pricing pressures and restrict availability of these coverages globally.

• The swift propagation of civil unrest across multiple jurisdictions is forcing insurers and reinsurers to consider the potential catastrophic nature of civil commotion events.

“We believe total insured losses for the French insurance industry should remain well below the EUR 1 billion mark,” said Marcos Alvarez, Global Head of Insurance at DBRS Morningstar. ”Additionally, we anticipate that direct insured losses due to the riots will remain manageable for most French insurers with limited impact on their credit profiles due to reinsurance protections in place and the partial liability of the French state for some of the losses. Given the rising materiality of recent SRCC losses, we expect that insurance and reinsurance companies will continue to apply stricter underwriting guidelines in the most conflictive jurisdictions, including reducing the availability of these coverages.”