Ferma: Understanding Ukraine’s ‘butterfly effect’

How the War in Ukraine could ripple across the world and amplify political violence was the topic of one of this morning’s streams at the Ferma Forum 2022 in Copenhagen.

Marie Biggas, active underwriter of SCOR Syndicate and CUO of SCOR UK, explained how to identify some of the ‘red flags’ in regions where rising inequality, distrust of political leaders and poverty could spill over into widespread social unrest.

”You could have a situation where people are so unhappy with the situation, which has been building for a long time, where a smaller event could trigger a much larger event,” she said.

Inevitably, the fallout from Ukraine will exacerbate existing tensions in many regions. Coming so soon after the economic impact of the global pandemic, inflation and - in particular - rising food prices and the broader cost of living crisis, is expected to cause uprisings.

Proactive firms fare better

Biggas said it was inevitable that some types of businesses were more vulnerable to social unrest, such as street level retail premises, which are easily accessible to rioters and looters.

It is important in such an environment to stay well informed, take action to improve the security of premises and people and have conversations with insurance and broker partners to ensure there are no gaps in coverage.

Biggas gave the example of the Arab Spring as an event where organisations with SRCC [strikes, riot and civil commotion] extensions on their property insurance policies found the cover was not broad enough to encompass rebellions.

Insurers, she explained, do not want to get into disputes around event definitions, as they can be reputationally damaging. She advised considering the breadth of coverage needed based on regular risk assessments and conversations within the tripartite relationship.

Seeking to take out broader political violence coverage post event is precisely the wrong time, she warned. 

“Now is a good time to think about social unrest based on what we’ve seen in some countries,” said Biggas. ”Think about what type of losses you could face and whether what you have in place is adquate, and have that conversation with your broker.”