Businesses “must think carefully about protecting themselves from a likely increase in damage” caused by growing social unrest in Latin America, driven primarily by inflation on top of the economic and social stress initially caused by COVID, Chaucer said.
Source: EPA
The number of protests and riots in Latin America rose from 3,405 to 3,617 last year, according to a new analysis by the re/insurer, with Colombia and Argentina seeing the biggest spikes in social unrest in the region. .
Colombia has seen social unrest events more than triple in 2021-2022, from 144 to 660, an increase of 358%. Argentina has seen a 37% increase in social unrest caused by economic stress. The total number of riots in Argentina rose from 140 to 192.
They have been hit hard by inflation, which has prompted governments to raise interest rates to compensate. In Colombia they went from 2% to 7.5% last year and in Argentina they went from 20% to 50% in the last two years.
Additionally, the LatAm region has been one of the hardest hit by the COVID pandemic. According to the OECD, it has struggled to contain contamination levels due to the prevalence of an informal economy, exacerbated by the limits of countries’ health infrastructures and weak social protection systems.
Growing unrest in the region, driven mainly by inflation, has resulted in property damage from the protests.
Unfortunately for some companies, Chaucer pointed out, their insurance policy may exclude this type of damage from general insurance policies.
The insurer also noted that companies are increasingly turning to specialist Strikes, Riots and Civil Disturbance (SRCC) cover, which explicitly insures against damage caused by riots and protests.
Businesses in high-risk areas can use SRCC insurance to fill any gaps in their existing coverage related to social unrest, Chaucer explained.
Harriet Sharp, head of political violence and crisis management at Chaucer, said: “While COVID-19 has shut down large swaths of the region’s economy, countries in Latin America have seen an increase in social unrest as incomes plummeted and health systems came under strain.”
“With the recovery now hampered by global inflation and supply chain uncertainty, discontent in the region looks likely to grow for the foreseeable future.”
Sharp added: “As many Latin American countries now face the prospect of inflation causing a cost of living crisis, companies need to think carefully about protecting against a likely increase in damage from social unrest.
Chaucer predicts that demand for insurance covering damages suffered during social unrest will continue to grow as global unrest escalates due to inflationary pressures.
