Once considered niche exposures, political violence (PV) and strikes, riots and civil commotion (SRCC) have rapidly become central to corporate risk profiles. As geopolitical shocks escalate in frequency and overlap, brokers say it's time for clients to move beyond viewing these as optional covers.
"From a broking perspective, they’ve stopped being specialist risks and become part of the environment our clients operate in every day," said Richard Miller (pictured left) of Howden Re. "We are no longer talking about the possibility of disruption, but how business functions in a world where political and social instability is a constant background factor."
Rather than isolated threats, PV and SRCC are now embedded exposures, often sitting implicitly across balance sheets and risk transfer programs. Miller emphasized the importance of recognising this shift: "Our role is to help clients treat PV and SRCC as core to their risk profile, not optional add-ons."
David Flandro (pictured right), also of Howden Re, pointed to recent events across Latin America, the Middle East and Europe as stark reminders. "PV and SRCC are clearly front-of-mind in a way they haven’t been even in the relatively chaotic recent past," he said.
As geopolitical events grow more complex and concurrent, risk modelling has had to evolve. "We are no longer talking about single-country or single-event exposure," Miller said. "Aggregation is now about understanding how a client’s footprint, supply chain and operations connect, not just where their assets sit on a map."
Flandro highlighted a significant uptick in analytical investment. "We’re seeing a sharp increase in modelling activity in this area, with firms moving away from purely qualitative approaches towards more structured, scenario-based analysis," he said. He cited an 18% increase in corporate use of political risk management tools compared to the early 2020s.
Howden Re is collaborating with model providers to enhance tools that allow clients and markets to better understand and apply existing reinsurance structures to SRCC exposure.
The rise of hybrid activity, including state-sponsored disruption and political decisions with economic fallout, continues to test the clarity of insurance policies.
"The hardest part is when cause and effect become blurred," Miller said. "When something is not clearly war, not clearly unrest, and not purely economic disruption, policy language gets tested."
Much of the advisory work now focuses on stress-testing contract language and ensuring that clients understand how coverage would respond under ambiguous scenarios.
Despite elevated losses and risks, capacity for PV and SRCC remains available. According to Miller, this is due to the market’s confidence in managing the exposure through structure, transparency and disciplined underwriting.
Flandro agreed, noting that pricing has kept pace with rising risk. "Although the market has softened from the peak, it is not an unprofitable 'soft market'," he said. "There is still opportunity for carriers to generate economic value through underwriting."
However, while interest in political risk insurance is growing, actual uptake continues to lag.
"Clients are more aware of the risk, but awareness does not automatically translate into action," Miller said. He described the broker’s role as helping clients bridge the gap between concern and confidence, particularly when it comes to complex, multi-event scenarios.
Flandro called this hesitation part of the insurance sector’s broader “loss gap.” He warned, "Once the losses happen, with hindsight, additional insurance purchase is seen as unequivocally the right choice. Better to realise that now than later."
In the absence of a market-defining geopolitical loss, there remains a risk that PV and SRCC exposures are being underestimated.
"Without a defining event, it is easy for exposure to build quietly in the background," Miller said. He urged clients and underwriters alike to maintain a forward-looking approach: "Part of our responsibility is to challenge complacency and encourage more proactive analysis of how geopolitical risk could crystallise across portfolios and risk transfer structures."
As the world grows more unstable, treating political risk as peripheral is no longer a tenable strategy.
