Super election year increases risks of political violence, warns Allianz

By Francis Allan L. Angelo

As nations worldwide gear up for a ‘super-cycle’ of elections in 2024, Allianz Commercial has issued a stark warning about the potential increase in political violence.

The insurance giant’s latest report draws attention to the precarious balance of peace as nearly half the world’s population prepares to vote within the year.

Security concerns are paramount, not only due to the imminent danger of localized unrest but also because of the repercussions such electoral outcomes could have on foreign policy, trade, and supply chains.

The U.S. presidential election in November stands out as particularly fraught with tension. A narrow victory could exacerbate already simmering societal divisions. Similarly, the European Parliament elections in June hold the potential for a rightward political shift, which could further deepen divides if populist or far-right parties secure more influence.

Financial repercussions are tangible and significant; a mere seven civil unrest incidents in recent years have accumulated economic and insured losses of approximately $13 billion. The prospect of terrorism and environmental activism pose additional threats, requiring businesses to remain vigilant and prepare for a range of risks.

Srdjan Todorovic, the Head of Political Violence and Hostile Environment Solutions at Allianz Commercial, remarked, “So many elections in one year raise concerns about the fueling of polarization, with tensions potentially playing out in heightened civil unrest.” He warns that this polarization, driven by fear, erodes trust in institutions and undermines the sense of shared societal values.

A concerning trend is the escalating unrest related to environmental issues. Incidents have soared by about 120% between 2022 and 2023, signaling a potent mix of activism and opposition to government climate policies. Todorovic cautions that these movements could shift from mere nuisance to significant criminal acts.

The report also sheds light on terrorism, noting a 22% increase in deaths from terrorism in 2023—the highest since 2017—despite a decrease in incidents. High-profile attacks, such as the one in Moscow earlier this year, remind us that the threat of politically or religiously motivated terrorism remains high on the global agenda.

In response to these escalating threats, multinational companies are increasingly seeking political violence insurance to safeguard their operations. These businesses are bracing for the impacts of unrest, which can range from direct damage to properties to indirect consequences like loss of attraction or denial of access.

Todorovic advises firms to proactively plan, increasing security measures and evaluating insurance policies to cover a spectrum of risks, including strikes, riots, and civil commotion. The report highlights that the recent history of protests in countries like Chile, South Africa, France, and the U.S. has spiked interest in political violence insurance, with the greatest demand coming from businesses with multi-country exposures.

As the political landscape heats up with the approaching elections, Allianz’s report serves as both a warning and a guide, urging businesses to fortify their resilience in the face of potential geopolitical turbulence.