The damage from the riots and looting across the country following the death of George Floyd will cost the insurance industry more than any other violent demonstrations in US history.
Insurance Information Institute compiled information from the Property Claim Services (PCS) company, which tracked insurance claims related to civil disorder.
Axios reports, “the arson, vandalism and looting... will result in at least $1 billion to $2 billion of paid insurance claims.[This will] eclips[e] the record set in Los Angeles in 1992 after the acquittal of the police officers who brutalized Rodney King.”
Loretta L. Worters of the Triple-I told Axios, “it's not just happening in one city or state – it's all over the country.And this is still happening, so the losses could be significantly more."
Brad Polumbo with the Foundation for Economic Education argues that the true costs of the riots is far higher than the $1 billion price tag.
“...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.
Moreover, looking at mere insurance totals fails to factor in the lost sales revenue and unpaid labor that businesses victimized by rioters face.
And that’s all without even considering the long-term economic impact rioting has on a community. We must also remember that riots leave a lasting shadow on a city that haunts its economy for decades. The afflicted areas face higher insurance rates, lower property values, higher prices, reduced tax revenue, and decreased economic opportunity.