Political risk an emerging issue in Canada

The Insurance Institute and the CIP Society have published the latest edition in an emerging issues research report series, entitled Political Risk: Implications for the Insurance Industry in Canada. In it, Insurance Institute researchers provide an in-depth and extensive look at political risks in Canada – civil disturbances, strikes, protests, supply management, climate change, a sense of inequity and unfairness and the absence of meaningful progress on social justice issues – all of which are expected to increase in this country and around the world in the next five to 10 years.

Protests are expected to increase 

“Disruption in Canada have been and are expected to remain less frequent and less severe than those in the United States and most other countries. The risk of damage to property and economic disruption is expected to remain low relative to most other countries. Nevertheless, protests are expected to increase, including the risk of more insurance claims,” they write.

The report includes a number of case studies, details the implications for the Canadian insurance industry and recommends a number of actions. Among them, they say the industry needs to be clear in policy wordings and communications where financial protection is or is not provided. “Canadians should know before major events how insurance will support recovery if damage occurs.” Second, they say the industry should be prepared to mobilize quickly during and following events and should also learn more about the factors contributing to political and social unrest and how those risks can be managed. 

“Understanding the nature, causes and impacts of these protests on all aspects of society will help the industry implement policies and practices that will be beneficial for both the industry and for customers. There is scope for the industry to support academic and insurance-specific research and to help develop risk knowledge and understanding of loss prevention,” they state. “Collection and sharing of industry loss data may be an important foundation to better understand this risk.”