MODULE 05 · MAN-MADE PERILS

Strikes, Riots & Civil Commotion (SRCC)

📖 ~14 min read· Includes Quiz

What Is SRCC?

Strikes, Riots and Civil Commotion (SRCC) is one of the oldest and most consistently relevant man-made perils in property insurance. Despite its somewhat archaic-sounding name, SRCC captures a category of risk that has generated some of the largest single insured loss events in recent decades and is growing in frequency and severity globally. The peril sits at the intersection of social unrest, political grievance, and economic inequality — forces that are, by most measures, intensifying in many parts of the world.

SRCC is distinct from terrorism in a critical way: it is collective rather than conspiratorial. Where terrorism involves a small group acting in secrecy to cause maximum harm, SRCC arises from large numbers of people acting collectively — often spontaneously or with minimal organisation — in response to a shared grievance. This distinction matters for insurance purposes because it determines coverage, and it matters for modelling purposes because the dynamics of crowd behaviour are different from those of deliberate attack planning.

SRCC Losses in Recent History

The 2019–2020 Chile protests (Estallido Social) caused insured losses estimated at USD 3 billion — the largest SRCC event in Latin American insurance history. The May–June 2020 civil unrest across the United States following the death of George Floyd caused insured losses of USD 1–2 billion. The 2021 South Africa riots caused insured losses of approximately USD 1.7 billion — the largest insured SRCC loss in African history. The 2019 Hong Kong protests caused estimated insured losses of USD 500 million. These are not isolated incidents — they form a pattern of escalating SRCC losses driven by social, political, and economic tensions worldwide.

Defining the Components of SRCC

The three elements of SRCC are legally and practically distinct, though they often occur in sequence or simultaneously:

Strikes

A strike, in the insurance context, refers to organised work stoppages — typically by labour groups — and the associated picketing, protest activity, and occasional property damage that accompanies them. The primary insurance losses from strikes are:

Business interruption: Production halts, supply chain disruption, port closures, and transport stoppages can cause significant economic losses to companies dependent on the affected workforce or infrastructure
Property damage: Picket line violence, sabotage of equipment, and damage to premises during strike activity — less common but potentially significant
Contingent business interruption: Companies dependent on a struck supplier or distributor may suffer losses even if their own operations are unaffected

Historically, traditional labour disputes drove strike risk. Today, the nature of strike risk has evolved — while traditional manufacturing strikes have declined in many countries, strikes in logistics, transport, and essential services (healthcare, education, utilities) have grown in significance. The 2022–2023 wave of strikes across the UK in rail, postal services, and the NHS illustrates this shift.

Riots

A riot is defined in most jurisdictions as a violent disturbance of the public peace by three or more persons. In insurance terms, riot coverage responds to property damage caused by riotous behaviour — looting, vandalism, arson, and the destruction of vehicles and property by crowds. The key insurance considerations include:

Direct property damage: Smashing, looting, and burning of commercial premises, vehicles, and infrastructure
Consequential losses: Business interruption from damage or from security cordon preventing access to undamaged premises
Denial of access: Insurers may be liable for losses when authorities close an area for security reasons even if the insured's property suffers no direct damage
Emergency response costs: Additional security, emergency boarding, temporary relocation

Civil Commotion

Civil commotion is the broadest of the three elements — it describes a state of general public disorder that may not rise to the level of organised rioting but creates conditions in which property is damaged and normal commercial activity is disrupted. It is the connective tissue between the relatively contained losses of individual riots and the catastrophic losses that can arise when disorder becomes widespread across a city or region.

The legal definition of civil commotion varies by jurisdiction and policy wording. In English law, it typically requires an element of turbulence or tumult and some degree of communal purpose among the participants. The distinction between riot, civil commotion, and rebellion/insurrection can be legally contested and has significant coverage implications — many policies exclude losses arising from insurrection or rebellion even where SRCC is covered.

The Social and Political Drivers of SRCC

Unlike natural perils, where the physical science of the hazard is relatively well understood, SRCC risk is rooted in social, economic, and political dynamics that are far harder to quantify. Understanding these drivers is essential for developing meaningful SRCC risk assessments:

Economic Inequality and Relative Deprivation

Research in political science and sociology consistently shows that absolute poverty is less strongly associated with civil unrest than relative deprivation — the perception that one's circumstances are unjust relative to others, or relative to one's own expectations. Rapid economic change, rising inequality, and the visibility of wealth disparities (amplified by social media) create conditions for social tension even in growing economies. The 2019 Chile protests erupted in one of Latin America's most economically successful countries — triggered by a metro fare increase that was perceived as symbolic of an unjust distribution of prosperity.

Political Grievances and Institutional Trust

The erosion of trust in political institutions — governments, courts, police, media — lowers the threshold for collective action. When populations believe that formal channels for redress (voting, courts, peaceful protest) are ineffective or inaccessible, the probability of direct action including property damage increases. This institutional trust deficit is measurable through surveys (such as the Edelman Trust Barometer) and is a key input to country-level SRCC risk assessments.

Trigger Events

Social unrest typically requires not only underlying conditions (inequality, political grievance) but also a trigger event — a specific incident that catalyses latent anger into collective action. The death of George Floyd triggered the 2020 U.S. unrest. A metro fare increase triggered Chile's 2019 protests. The proposed extradition bill triggered Hong Kong's 2019 protests. Trigger events are by nature unpredictable, which is why SRCC risk assessment focuses on underlying vulnerability rather than attempting to predict specific triggers.

Social Media and Contagion

Social media has fundamentally changed the dynamics of civil unrest. Events that historically might have remained localised can now spread rapidly — both as inspiration for copycat actions in other cities and as coordination tools for protest organisers. The Arab Spring (2011), Black Lives Matter (2020), and the spread of fuel price protests across multiple countries in 2022 all demonstrate how social media enables rapid geographic diffusion of protest movements. For cat modellers, this contagion effect means that SRCC events are increasingly correlated across cities and even countries — a property of the hazard with important implications for accumulation management.

The SRCC Damage Mechanism

SRCC causes property damage through several distinct mechanisms, each with different implications for vulnerability assessment:

Looting

The opportunistic theft of goods from commercial premises — particularly retail shops, electronics stores, supermarkets, and pharmacies — is a primary driver of SRCC property losses. Looting losses involve both the value of stolen goods (contents) and damage to the premises from forced entry. Retail properties in city centres and shopping malls are disproportionately exposed to looting losses. The speed and scale of looting during civil unrest can be staggering — during the 2021 South Africa riots, entire shopping centres were systematically emptied of stock within hours.

Arson

Deliberate fire-setting is a frequent feature of serious civil unrest, causing far greater property damage than looting alone. Arson during civil unrest differs from ordinary arson in that it can affect multiple properties simultaneously, fire services may be unable to respond due to security conditions, and the widespread nature of the unrest can overwhelm suppression capacity. The 2011 England riots, the 2020 Minneapolis unrest, and the 2021 South Africa riots all featured significant arson, with individual fires spreading to adjacent properties.

Vandalism and Criminal Damage

Smashing of windows, doors, and shopfronts — even without subsequent looting — causes significant property damage and creates security vulnerabilities that expose properties to weather damage. Vandalism of vehicles, street furniture, and infrastructure can add to the total loss picture.

Business Interruption Without Physical Damage

Perhaps the most economically significant category of SRCC loss is business interruption that occurs without any direct physical damage to the insured property. Security cordons, curfews, and unsafe conditions can prevent businesses from operating for days or weeks even if their premises are entirely undamaged. Coverage for this loss depends critically on policy wording — specifically whether the policy requires physical damage as a prerequisite for business interruption coverage, or whether it covers loss of access from civil authority orders.

The Coverage Gap — Physical Damage Trigger

One of the most contested areas in SRCC insurance is whether business interruption coverage triggers in the absence of physical damage. Many standard property policies require that business interruption results from physical loss or damage to the insured property. A business that cannot operate because a curfew prevents access — but whose premises are physically untouched — may find itself without coverage. The COVID-19 business interruption litigation (while not an SRCC case) has sharpened focus on this physical damage trigger debate across the industry, and SRCC wordings are increasingly being scrutinised and clarified.

SRCC Modelling Approaches

SRCC is one of the most challenging perils to model quantitatively, for several reasons:

Data sparsity: Serious SRCC events affecting insured property are relatively infrequent in most markets, limiting the historical data available for statistical modelling
High variability: The same underlying social conditions can produce very different outcomes depending on the trigger event, the response of security forces, and the actions of specific influential individuals — making loss outcomes highly sensitive to contingent factors
Coverage heterogeneity: Different policyholders have different coverage terms — some with broad civil commotion cover, others with narrow riot-only cover, some with extensive business interruption, others with none — making portfolio-level loss aggregation complex

Country Risk Assessment

The foundation of SRCC modelling is a country risk assessment — an evaluation of the probability and potential severity of social unrest in each country where the insured portfolio has exposure. Leading frameworks include those developed by specialist political risk intelligence firms (Control Risks, Verisk Maplecroft, Oxford Analytica) and rating agencies. These assessments combine quantitative indicators (inequality measures, governance scores, economic vulnerability indices) with qualitative political analysis.

Scenario-Based Loss Estimation

Given the difficulty of purely statistical modelling, SRCC cat models typically use a scenario-based approach. Historical SRCC events are used as templates — defining the geographic spread of unrest, the types and densities of properties affected, the proportion of properties suffering different damage levels, and the duration of disruption. These templates are then applied to current exposure data, scaled for differences in portfolio composition and local market conditions.

Accumulation Analysis

A key output of SRCC modelling is accumulation analysis — identifying concentrations of insured value in locations most vulnerable to civil unrest. City centre retail concentrations, shopping mall clusters, and commercial districts in cities with elevated social tension indicators represent the primary accumulation concerns. Reinsurers and insurers with significant SRCC exposure use accumulation analysis to set aggregate limits, manage per-location concentrations, and price adequately for the correlated nature of SRCC losses within a city or region.

SRCC in the Reinsurance Market

SRCC coverage in the reinsurance market is typically provided through specialist political risk and violence treaties or as an extension to property catastrophe programmes. Key considerations for reinsurers include:

Hours clauses: Reinsurance treaties typically define a single SRCC "occurrence" as all losses arising from a defined period of civil unrest — the hours clause determines how long a period of unrest constitutes a single occurrence for aggregation purposes. Clauses of 72 or 168 hours are common, though extended periods of unrest (the Chile protests lasted weeks) can test these definitions
Geographic aggregation: Unlike a hurricane (which has a clearly defined geographic footprint), SRCC can affect multiple cities simultaneously — as occurred across the U.S. in 2020. Reinsurance structures must address whether losses across multiple cities in the same country aggregate to a single occurrence
War exclusions: Virtually all SRCC coverage — at both primary and reinsurance levels — excludes losses arising from war, invasion, or military action. The boundary between civil commotion and armed conflict or insurrection is critically important and can be legally contested in situations of severe unrest

Knowledge Check — SRCC

Answer all five questions. You need 4 of 5 (80%) to pass.

1. What fundamentally distinguishes SRCC from terrorism as an insurance peril?

ASRCC only covers property damage while terrorism covers both property and liability

BSRCC arises from large numbers of people acting collectively in response to a shared grievance, while terrorism involves a small group acting in secrecy to cause deliberate harm — a fundamental difference in dynamics, scale, and predictability

CSRCC is covered under standard property policies while terrorism always requires a separate policy

DSRCC only occurs in developing countries while terrorism is a global risk

2. Research shows that absolute poverty is less strongly associated with civil unrest than "relative deprivation." What does this mean for SRCC risk assessment?

AIt means SRCC risk is highest in the world's poorest countries and lowest in wealthy ones

BIt means SRCC risk cannot be assessed by GDP alone — even prosperous and growing economies can face high SRCC risk if citizens perceive the distribution of prosperity as unjust, as demonstrated by Chile's 2019 protests in one of Latin America's most economically successful countries

CIt means absolute economic data is irrelevant to SRCC modelling and only qualitative political analysis matters

DIt means SRCC losses are always larger in wealthy countries because there is more insured value to lose

3. Why is the "physical damage trigger" in business interruption policies particularly important for SRCC losses?

ABecause SRCC events never cause physical damage, only access disruption

CBecause a large proportion of SRCC business interruption losses arise from curfews, security cordons, and unsafe conditions preventing access to physically undamaged premises — if the policy requires physical damage to trigger BI coverage, these losses may not be covered, creating a significant gap between economic loss and insured loss

BBecause physical damage from SRCC is always excluded under standard property policies

DBecause the physical damage trigger determines whether the government SRCC backstop activates

4. What is the significance of the "hours clause" in reinsurance treaties covering SRCC?

AIt limits the hours of the day during which SRCC coverage is active

BIt defines how long a continuous period of unrest constitutes a single occurrence for loss aggregation — determining whether losses from a multi-week protest movement are treated as one catastrophe event or multiple separate occurrences for reinsurance purposes

CIt sets the maximum number of hours a business interruption claim can cover

DIt specifies how quickly the insurer must respond to SRCC claims

5. How has social media changed SRCC risk in a way that is particularly relevant to accumulation management?

ASocial media allows insurers to monitor unrest in real time and cancel policies before losses occur

BSocial media enables rapid geographic spread of civil unrest — both as inspiration and coordination — meaning SRCC events are increasingly correlated across multiple cities or countries simultaneously, creating portfolio-level accumulations that cannot be managed by assuming geographic diversification

CSocial media has reduced SRCC frequency by providing an alternative outlet for public grievance

DSocial media creates cyber SRCC losses that standard property policies do not cover