By Carolyn Cohn
LONDON (Reuters) – Insurance premiums to protect shops and offices in Chile from damage caused by protests have at least doubled, industry sources say, as insurers scramble to cover losses following last year’s riots.
At least 27 people were killed during protests that began in October over a rise in transport fares and spiraled out of control.
The government estimated weeks of strikes, marches and damage to property and public transport cost the economy $3 billion, while the local subsidiary of Walmart <WMT.N> said 128 of its approximately 400 stores had been looted.
International insurers that focus on cover against attacks on property were surprised by the length of the protests in a country previously regarded as low risk.
Tim Davies, head of crisis management at Lloyd’s of London insurer Canopius, said the firm had a strong presence in political violence insurance in Chile.
“Until eight or nine months ago, we would have bitten your hand off to write more.”
Insurers are now less enthusiastic, and sources, who asked not to be named, said some had withdrawn from the market.
Spanish insurer Mapfre <MAP.MC> said last month the riots, together with typhoons in Japan, would knock between 130 million and 140 million euros ($144-$155 million) from its results.
KBW analysts said the protests in Chile were likely to impact international insurers’ fourth-quarter earnings.
The losses and reduction in providers have driven up rates.
Chris Kirby, head of political violence and terrorism at London insurer Optio, said even for businesses that had not made a claim and were not in the middle of a big city, “rates will typically double”.
A London broker said rates had trebled, while Allianz <ALVG.DE> and Munich Re <MUVGn.DE> also said rates had risen significantly.
Insurers remain cautious ahead of a referendum on a new constitution in April, which they said could trigger more protests.
Physical damage because of political protests is typically covered by terrorism or political violence insurance policies that companies buy in addition to property policies. These are often insured or reinsured by Lloyd’s of London and other London-based insurers.
Competition has lowered property rates globally in recent years and encouraged property insurers to offer protection against “strikes, riots and civil commotion” for no extra cost, particularly in countries regarded as stable.
That trend is reversing, with property insurers starting to exclude these events from their policies in Chile, as well in other countries where there have been protests, such as Colombia, insurers say.
Given Chile’s upcoming referendum, “it is likely we will need…12–24 months before the market calms down and gets back to normal,” Steve Dalchow, executive director in crisis management at broker Gallagher, said.
($1 = 0.9014 euros)
(Additional reporting by Suzanne Barlyn in New York and Aislinn Laing in Santiago, editing by Barbara Lewis)