A report published by Jennifer A. Kingson at Axios concludes that the riots following the death of George Floyd are the most expensive in U. S. history:
The vandalism and looting following the death of George Floyd at the hands of the Minneapolis police will cost the insurance industry more than any other violent demonstrations in recent history, Axios has learned.
That’s both in absolute and inflation-adjusted dollars. The table included in the piece uses figures from the Insurance Information Institute:
On May 26, 2020 after the death of George Floyd in police custody in Minneapolis, Minnesota, protests and riots broke out in that city and spread over the next weeks to another 140 U.S. cities, including: Washington, D.C.; New York, New York; Chicago, Illinois; Philadelphia, Pennsylvania; and Los Angeles, California.
By June 4 at least 40 cities in 23 states had imposed curfews, and rioting resulted in at least six deaths. National Guard were called in at least 21 states and Washington, D.C.
The Property Claim Services (PCS) a unit of a Verisk Analytics, designated the riots in Minneapolis a catastrophe. The Minneapolis civil disorder is the first time that PCS has compiled insured losses for a civil disorder event since the Baltimore, Maryland, riots of April 2015. Those riots did not result in insured losses reaching $25 million when it occurred, PCS’s threshold for a catastrophe. For the first time, PCS has designated this civil disorder and those that followed across the United States from May 26 to June 8 as a multi-state catastrophe event. PCS has included over 20 states with significant losses for this catastrophe. The 2020 event is the first time since 1992 that PCS has compiled significant insured losses for a civil disorder and declared it a catastrophe. Insured losses for this event are not yet available from PCS. A preliminary estimate from insurance industry analysts would put the range between $500 million and $900 million in insured losses, an estimate that will change as insurers are resurveyed and data is refined.
Meanwhile, at the Foundation for Economic Education Brad Polumbo observes that the figures presented almost certainly understate the full costs:
However, there are many reasons that this figure vastly underestimates the true damage wrought by the looting and violence that has broken out in recent months.
For one, the Axios report only measures insured losses. The obvious problem here is that not all the damages were insured.
As I have previously explained, insurance is no panacea for the societal ills imposed by rioting. Indeed, 75 percent of US businesses are under-insured and about 40 percent of small businesses have no insurance at all. Their untold millions in losses don’t show up in the $2 billion figure.
So, too, insurance doesn’t account for the personal pain and suffering caused by rioting. For example, what about the more than 15 people who died during the unrest? Their lives and their families’ pain don’t get counted in any insurance company’s budgetary analysis. Nor does the pain of those such as an elderly businessman punched in the face while his store was ransacked in Kenosha, Wisconsin manifest itself in total reports on insurance compensation.
Finally, there’s also a loss in sales-based tax revenue from the riots. All of these—insured losses, uninsured loss, pain and suffering, and lost tax revenue—will fall most heavily on largely minority communities least able to afford them.
The Axios piece also points out that the riots were distinctive in occuring in so many places. To that I would add that they are still going on and they have been demographically distinctive.
2020 will prove very hard for underwriters. Industry consolidation means there are fewer of them than there were a generation ago. I expect some of them will pursue civil remedies, suing individuals, municipalities, and states. If orders to law enforcement were issued to hold back from enforcing the law and any of these orders are made public, as in from FOIA suits, there may be personal liability for elected officials as well.
The real story is that the riots have the support of local elected governors, mayors, district attorneys, and city councilmen. Furthermore they are highly coordinated and funded nationally, especially by George Soros, and some of the rioters have paramilitary training. There is even a busing operation. BLM itself have a few dozen new buses which it uses to transport activists from one city to the next.
This is an actual insurrection, and we had better get serious and treat it as such.
Add that to the west coast fires and gulf hurricanes and we’ll all be paying more for insurance.
But that’s in the same category as death and taxes .
‘If orders to law enforcement were issued to hold back from enforcing the law and any of these orders are made public, as in from FOIA suits, there may be personal liability for elected officials as well.’
I f**kin hope they get sued personally. Every time there’s a judgment or a settlement for government wrongdoing, it seems it comes out of the taxpayers’ pockets, not the pockets of who’s actually responsible. A lesson learned; they can break the law all they want, or allow it to be broken with impunity, and the worse that can happen is they might not get reelected.
‘Add that to the west coast fires and gulf hurricanes and we’ll all be paying more for insurance.
But that’s in the same category as death and taxes.’
No, I think what might happen is that private insurance will go away. And any insurance you can purchase will be government or government-supported. Meaning people in Summers County WV will have to pay for your business that got torched and looted when your local supervisors tell the police to stand down. Look at what happened with flood insurance. Private insurers got forced out of business, the government took over, and now all the taxpayers in the US have to pay up every time a hurricane or a flood wipes out shorelines of beachfront mega-mansions which are then promptly rebuilt. Yeah, I’m on a rant this morning.
I agree with Tars Tarkas on this:
It will become impossible to buy certain kinds of insurance from private providers. There will be outcries for publicly-funded coverage. They should be resisted.