R.J. Lehmann on civil unrest insurance

Washington Free Beacon – ICLE Editor-in-Chief R.J. Lehmann was quoted by the Washington Free Beacon in a story about the possible effects of last summer’s riots on insurance for civil unrest. The full story is available here.

In Minneapolis, for example, insurance covered only half the city’s losses, which were concentrated among immigrant- and minority-owned stores. That will increase demand for property insurance and drive up rates, according to R.J. Lehmann, a senior fellow of insurance policy at the International Center for Law and Economics.

It’s never good for insurers to have to pay out claims, Lehmann told the Free Beacon, but it is good for them if businesses are worried about civil unrest. “Higher uncertainty makes more people want to buy coverage,” he said, “and makes them willing to pay more for coverage.”

At the same time, it makes insurance more expensive. “It would not be surprising if the risk of urban conflagrations increased rates or made insurance less available,” Lehmann said, in part because insurers try to avoid concentrating risk in any particular area. Industry insiders echoed his analysis, saying rates had gone up in the wake of the unrest.