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Polarisation in US, EU with large insurance losses
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Africa’s need insurance review, business continuity
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Multinationals interested in pol.violence insurance
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7 economic, insured incidents’ losses cost $13bn
Ben Eguzozie
As half the world goes into elections this year, Allianz warns of increased political violence and stability risks, as well as the need for insurance review and business continuity by companies in certain parts of the world.
In particular, Allianz warns that security is a concern in many territories, not only from the threat of localised unrest but because of the wider-reaching consequences of electoral outcomes on foreign policy, trade relations, and supply chains.
All eyes on elections in the US and EU
The US presidential election in November is likely to be a close call, with the outcome depending on results in a handful of states. A recent poll shows that more than one-third of Americans believe President Biden’s election win in 2020 was not legitimate. Widespread disaffection among voters could be exploited by misinformation created by Artificial Intelligence and spread via social media. Deepfakes, disinformation and repurposed imagery, as well as customised messaging, could galvanise unrest or influence small but potentially decisive parts of electorates.
A narrow result in the US headline election could inflame existing tensions. The European Parliament elections in June could also deepen divisions, if radical-right parties gain votes and seats.
Many commentators have predicted that European Union (EU) elections in June this year could see a number of states politically shift to the right, with the potential for populist or far-right parties to gain votes and seats, building on a trend seen in 2023. Any success for these parties across Europe could result in growing opposition to EU environmental, immigration and human rights policies, the Allianz report said.
Srdjan Todorovic, head of political violence and hostile environment solutions at Allianz Commercial, said, “so many elections in one year raise concerns about the fuelling of polarisation, with tensions potentially playing out in heightened civil unrest”. He said polarisation and unrest within societies are fuelled by fear. “They undermine trust in institutions and challenge people’s sense of a common purpose built on shared values”.
Todorovic adds that the impacts of a political shift to the right and subsequent policy changes endure long after a political party’s term in office. He said there are expectations of increased unrest around environmental issues in future, not only from activists, but from those who are pushing back against government climate mitigation policies.
“They fundamentally change societies and public attitudes; and make the next electoral shift to the centre or left seem drastic, creating the potential for schisms and potentially violent responses from those who feel underrepresented by a regime change,” he said.
The report said, as unrest can now spread more quickly and widely, due in part to social media, financial costs from such events for companies and insurers are mounting. Economic and insured losses from just seven civil unrest incidents in recent years cost approximately $13 billion. With the threat of terrorism also on the rise, and the prospect of greater disruption from environmental activists occurring, global businesses will face even more challenges in the next few years and will need to anticipate as well as mitigate evolving risks with robust business continuity planning.
Need for insurance review, business continuity plan in Africa
In Africa the elections pose challenges and opportunities for the continent’s political stability. Most of the elections will be in Southern Africa including Botswana, Mauritius, Mozambique, Namibia, and South Africa. West Africa will hold the second most elections in Burkina Faso, Ghana, Guinea Bissau, and Mali. In North Africa, Mauritania, Algeria, Libya, and Tunisia are set to host elections. Ethiopia, Somalia, and South Sudan, Chad, and Rwanda in Central and Eastern Africa are scheduled to cast votes.
Allianz advised businesses in West Africa and the Sahel, largely notorious as the epicentre for coup d’états and terrorism, to implement forward planning, robust business continuity strategies, increased security measures and reviewing insurance policies this year.
In particular, the Allianz report emphasised the significant security concerns in many territories with wide-reaching consequences.
In recent years, Africa hit geopolitical risk headlines, with Niger and Gabon experiencing coup d’états. In Sudan, a civil war has led to the displacement of eight million people, including six million within the country — the largest internal displacement crisis in the world.
According to Allianz, the South African elections in May are a potential flashpoint. Polls indicate votes for the ruling African National Congress (ANC) could dip below 50%, forcing it into a coalition — a first at the national level — after being in power for 30 years.
Etienne Cheret, regional practice group leader, crisis management France and Africa at Allianz Commercial says “South Africa suffers from high unemployment, particularly among the young, and significant wealth inequality”.
Available data from Statista says as of the fourth quarter of 2023 (Q4 2023), South Africa’s unemployment rate stood at 32.1 percent. The majority of unemployed individuals only have education level below matriculation (or grade 12), while those that had finished their matriculation year represented around 34 percent. Additionally, Cheret said crime, corruption, and blackouts have caused widespread frustration in the rainbow nation.
“There is already a high level of disillusionment among the population, so we are watching the situation very closely,” the regional practice group leader, crisis management France and Africa at Allianz Commercial, said.
Of the 10 countries in the world with the highest unemployment rates in 2023, nine were in Sub-Saharan Africa.
There is a close intersection between election fall-outs and rising unemployment, terrorism or geopolitical risks. Allianz Commercial says the epicentre of terrorism has moved from the Middle East and North Africa to Sub-Saharan Africa — the most affected region globally — and is largely concentrated on the Sahel region. Burkina Faso is the country most impacted by terrorism, with deaths increasing by 68% to almost 2,000 people — a quarter of all terrorist deaths globally.
“In Africa, peacekeeping forces have been withdrawing from the Democratic Republic of Congo and Somalia as well as from countries in the unstable Sahel region. This risks creating security vacuums, which could then be exploited by armed groups and militants,” added Cheret, the Allianz regional practice group leader for crisis management in France and Africa.
