Damage from riots across the US may cost insurance companies more than $1 billion

The damage from riots sparked by the police killing of George Floyd may end up being the most expensive in U.S. history, costing insurance companies between $1 billion and $2 billion.

The data comes from the Insurance Information Institute (Triple-I), which compiles information from a company called Property Claim Services (PCS). The latter has been tracking insurance claims related to civil disorder since 1950.

In reports provided to Axios, Triple I estimates that the damage from the unrest between May 26 and June 8 will be the costliest in the nation’s history – surpassing the cost of the 1992 Rodney King riots in Los Angeles.

A good part of why the damages are so expensive is the nationwide scale of the riots.

“It’s not just happening in one city or state – it’s all over the country,” Triple-I spokeswoman Loretta L. Worters told Axios. “And this is still happening, so the losses could be significantly more.”

George Floyd riots unique due to their nationwide scope

Triple-I stated that the violence sparked by the killing of George Floyd was the first “multi-state catastrophe event” ever declared for civil disorder by PCS. According to Tom Johansmeyer, head of the PCS, the company classifies anything with over $25 million in insured losses as “a catastrophe.”

Previous instances classified as catastrophes by the PCS have only unfolded in individual cities. Examples include the 1967 Detroit riots, the 1977 New York City blackout and the 1992 Los Angeles riots – the previous record holder for damages.

Both riots and peaceful protests against police brutality have not just in major cities across America, but also in its rural areas, from Lancaster, Pennsylvania to Kenosha, Wisconsin. This nationwide spread of rioting was unprecedented, according to Johansmeyer. (Related: Multiple cities declare curfews as Antifa riots continue.)

“Not only is this the first, this is the first – kind of with a cymbal crash,” he said.

Even though the costs are already high, however, the PCS is expecting that the losses could be significantly more with the coming election season. Johansmeyer stated that this coming November, “There could be riots that lead to significant losses that would meet our reporting thresholds.”

Meanwhile, in the West Coast, near-constant civil unrest in cities is being compounded by the rapidly-spreading wildfires.

Natural disasters are still costing the industry more

While the damages from the ongoing riots have hit record levels, their cost to insurance companies still pales in comparison that from the natural disasters that have hammered parts of the country.

A report by catastrophe risk solutions company Risk Management Solutions (RMS) puts the estimated cost from Hurricane Isaias at around $3 billion to $4.5 billion.

Meanwhile, the just-started wildfire season in the U.S. West has already cost insurance companies around $1.5 billion, according to Triple-I.

“In California alone, wildfires have already burned 2.2 million acres in 2020 – more than any year on record. And the 2020 wildfire season still has a way to go,” says Worters.

For comparison, the total bill for wildfires was $18 billion for all of 2018 and $15 billion for all of 2017. Numbers for 2019 are unavailable as of reporting time.

With the trend for wildfire damages generally moving upward, and with this year’s wildfires already having burned more than previous years, damages for 2020 are likely to be even higher.

With these numbers in mind, it’s not surprising that the insurance industry sees the greater potential damages from natural disasters such as Hurricane Isaias and the wildfires as a bigger concern than losses from the riots.

The latter, “while severe, would not have [an] impact on the financial stability of the industry,” said Worters to The New York Post. “Hurricanes, however, could have a considerable impact on the insurance industry as could the wildfires.”

Sources include:

FoxBusiness.com

Axios.com

RMS.com

NYPost.com