Insurance costs from riots, unrest could equal cost of Category 2 Hurricane Sally
Damages may greatly exceed record 1992 Los Angeles riots.
The Facts Inside Our Reporter’s Notebook
Insured losses stemming from the riots and unrest intermittently associated with Black Lives Matter protests across the country could possibly top $2 billion, a sum equal to industry estimates of the losses associated with the recent highly destructive Category 2 Hurricane Sally.
The riots were touched off by the police-involved death of Minneapolis resident George Floyd, who died on May 25 after a police officer kneeled on his neck for several minutes during an arrest. Since then, violence, looting, arson and widespread vandalism linked to political unrest have broken out sporadically in numerous cities across the country.
The non-fatal police shooting of Jacob Blake in Kenosha, Wisc. late last month was followed by another round of riots, with numerous buildings and properties in the city being burned to the ground.
The total insured losses of riots nationwide could run as high as $2 billion, according to industry experts. That sum is roughly equal to estimates of insured losses in the wake of Hurricane Sally, a destructive Category 2 storm that earlier this month struck the Gulf Coast of Alabama with sustained 105 MPH winds.
Karen Clarke and Co., a catastrophic risk management firm based in Boston, said in a press release last week that it "estimate[d] that the insured loss to onshore properties from Hurricane Sally will be around $2 billion," owing to storm surges, bridge damage, building inundation, and vehicle destruction.
Insurance costs could dwarf 1992 riots
Loretta Worters, a spokeswoman for the Insurance Information Institute, confirmed to Just the News that experts were presently estimating that the riot's insured losses could run as high as $2 billion, though she stressed that figure was still preliminary and subject to change depending on further industry investigation.
Worters noted that the high estimate of $2 billion would put losses from this year's riots at well over the total resulting from the 1992 Los Angeles riots following the Rodney King verdict. At the time, those losses totaled about $775 million, equal to about $1.4 billion today.
The 1992 riots took place "in less than a week's time frame," Worters noted, "whereas these civil disorders have been far longer" and "much more widespread." Thus, she said, "it is likely the losses from all the riots thus far would be higher."
She noted that the Insurance Services Office's Property Claims Service, the source for the high-end $2 billion estimate, has designated the riots from May 26 to June 6 as a "multi-state catastrophe event," the first time the company has classified insurance losses in such a manner.
Data on the estimates from PCS was not readily available online. Axios reports that the company prefers to "sell that data to clients" rather than reveal it outright.
In an emailed statement, PCS head Tom Johansmeyer said that PCS's decision to designate the riots a multi-state catastrophe was "truly unprecedented."
"PCS has identified several large retailers that have already notified an aggregate US$200 million to their insurers on limits believed to be approximately US$1 billion in aggregate," Johansmeyer said.
"In a review of potential large risk losses from the riot for the PCS Global Large Loss platform," he continued, "we have identified more than half a dozen companies to monitor for potential losses of at least US$250 million. We've already noted more than US$3 billion in such programs exposed to the riots — in addition to the conventional catastrophe losses PCS is reviewing."
Johansmeyer noted that the "changed landscape of the retail and broader consumer business sector" means national-scale retailers may face devastating riot damage in multiple U.S. cities relative to what they may have faced relative to thirty years ago.
Worters said that insured losses may only continue to grow in the weeks and months ahead. "If we see more problems where there's been alleged police brutality, there may be more of this," she said, noting also that "there could be some additional rioting depending on how the election goes."
Concerns about riots have persisted throughout the summer, even as the Black Lives Matter-led unrest has waned. Shadi Hamid, a writer at the Atlantic, claimed earlier this month that a Trump victory in November could result in "more of the social unrest and street battles" that have swept the country over the last few months.
Former CNN host Reza Aslan, meanwhile, tweeted last week that rioters would "burn the entire f*****g thing down" if Republican Senators attempt to confirm a new justice to the Supreme Court.
Concern over the violent riots has reached significant numbers of Americans. A Just the News Daily Poll at the beginning of the month revealed that nearly half of all voters are concerned that "violent riots could arise in their own communities."