Navigating Political Risks in a Volatile World

By Georgina Rees, Associate Director: International Terrorism, Aon Global Broking Centre (UK) and

Simon Baker, Executive Head: Retail, Aon South Africa

Political instability, terrorism, riot and strike risks are escalating amid global geopolitical and environmental volatility.  The requirement in Africa to adapt to these evident changes and uncertainty is crucial. South Africa also faces many compounding and contributing risk factors.  

The Changing Landscape of Political Violence Insurance

While there has been some stabilisation in the market South Africa maintains a high-risk rating in terms of Political Violence Insurance (PVI). Aon supports many clients in implementing additional levels of coverage and risk protection through PVI solutions placed outside of South Africa that supplement the local insurance protection provided by the South African Special Risks Insurance Association (SASRIA).  

PVI extends protection against a range of perils, including terrorism, sabotage, strikes, riots, civil commotion, malicious damage, insurrection, revolution, rebellion, mutiny, coup d’état, war and civil war. Given the increasing complexity and volatility of these risks, structuring an insurance programme that adequately mitigates exposure requires specialist broking expertise and access to both local and international insurance markets. The London Market paid out cumulative claims in excess of USD1.5billion to Aon’s clients following the unrest in 2021.   

Aon has identified insurance carriers wanting to advance riot cover solutions for businesses. If the current environment continues and remains steady, we’re likely to see the underwriting environment soften further.

More insurance and reinsurance capacity being deployed into the PVI space translates to emerging improvement in pricing and coverage terms. This increased flexibility provides organisations with enhanced opportunities to transfer their direct exposure to the insurance market. With our global networks and expertise, Aon plays a crucial risk advisory role in facilitating access to insurance solutions and markets that offer PVI cover, alongside the implementation of structured risk mitigation strategies.

As the world faces increasing political, economic and environmental uncertainties, businesses must take proactive steps to mitigate their exposure by leveraging specialist insurance and reinsurance solutions. Organisations can strengthen their resilience against the financial and operational impacts of political instability, terrorism, riot and strikes. Risk transfer through insurance solutions and robust risk management strategies sustain business continuity and long-term stability.