Social media’s power to distort or support the truth is a key factor driving perceived political polarisation, social unrest and ultimately demand for political violence (PV) insurance.
Speaking on The Political Risk Podcast, Jelle Ouwehand, Head of Terrorism, Political Violence & War at Arch Insurance International, discussed how rising social and economic inequalities along with social media’s ability to fan the flames of disorder are key factors affecting the PV market.
Ouwehand explained how social media has become a tinderbox and a means of influencing what unravels during an SRCC (strikes, riots and civil commotion) event — for good or bad, depending on whether fake news echo chambers or real information are in the driving seat.
“We have seen less willingness to trust mainstream media, and also by virtue of algorithms within social media apps, you’re seeing more feeds reinforcing a view that you may be holding and making you less willing to look at an opposing view,” he said.
This propagation of misinformation can have damaging effects and cause widespread disorder and violence. This was seen during the 2024 Southport riots in the UK, where disinformation was spread via social media regarding the identity of the attacker which caused the worst disorder the country had seen since 2011. Ouwehand highlighted such examples of fake news as a growing issue but also emphasised the power of social media to spread the truth and support valid protests.
“Social media feeds can be really helpful, as we saw back in the 2011 with the Egyptian revolution, because they filmed clear violations by the police force towards protestors,” he said. “Real life media feeds can help us form a picture of what’s actually happening on the ground more readily than if we would have to wait for it to come up in the news.”
“Social media is still a really good way of steering protest movement, but if it’s based on news that is factually incorrect and leans into more extreme views, there’s more willingness for certain things to turn violent.”
During the conversation, Ouwehand also discussed factors shaping the increase in demand for standalone SRCC coverage, highlighting the 2019–2020 Chilean riots as a key catalysts.
Inequality is often seen as a main driver of SRCC events. The Chilean riots were sparked by a metro fare increase but stoked by various cost-of-living and inequality issues. “For any protest movement we’ve seen, there’s always a grievance of some sort and often one of the big things is inequality.” he added.
Other catalysts included the 2021 Zuma riots in South Africa, whose underlying causes included economic inequality and unemployment, and the 2022 Peru protests against inflation.
“It goes in upticks,” he said. “There is an increase in unrest, which then often results in strikes, riots and civil commotion being excluded by the all-risk carriers who would have covered it as part of their all-risk offering.”
Ouwehand added that writing SRCC on a standalone basis requires in-depth analysis and understanding of the differences between urban and rural environments as well as the sophistication of the country’s economy.
“As riots start occurring in places that have relatively sophisticated economies and also, therefore, higher insured values, the propensity for major claims significantly increases,” he said. “This is always something we take into consideration, certainly in terms of pricing.”
Discussing other factors impacting pricing, he stressed the importance of pricing for attrition. “You will have constant small claims, which start eroding away your premium base and it’s something that you need to price accordingly.”
And while pricing has come under pressure, he remains optimistic for the foreseeable future, saying: “Of course, there is new capacity that comes in, but overall, we’re still able to get adequacy where we need it. With SRCC, certainly, I think there is a general recognition in the market that a separate lens needs to be applied to it.”
From an underwriting perspective, Ouwehand believes the importance of the insured’s approach to CSR will continue to grow.
“We always look out for companies that have clear engagement with local communities and are very good at articulating to us, as underwriters, what they actually do,” he said. “In the extractive industries, for example, there might be an active effort on behalf of the insured to employ the locals, or, if they can’t be employed, to ensure they can still get a benefit from it, by way of new schools or infrastructure.”
One reason these factors are particularly relevant to PV insurance is their ability to quell the potential for riots.
“These things can help bring down the propensity of people to go and protest against those sorts of assets, or the owners of those assets,” he said. “It’s a qualitative element of the corporate social responsibility that can have a huge impact in terms of whether or not you think the risk is going to be well managed, and anecdotal evidence would suggest that it usually serves us well to take a good look at that.”