Assault on U.S. Capitol a Spark, but No Catastrophic Property Losses Yet

By Jim Sams | January 6, 2021

Commercial property insurers who are already edgy after suffering historic losses from civil unrest got another jolt Wednesday when pro-Trump protestors smashed windows to gain entry into the U.S. Capitol.

But there’s “a lot of mileage” between the Washington D.C. protest and the kind of widespread rioting that erupted after the police killing of George Floyd in Minneapolis, which caused more than $2 billion in projected damages, said Thomas R. Johansmeyer, leader of Verisk’s Property Claims Services.

Catastrophe-level property losses from rioting aren’t likely unless the protests move far beyond government buildings. Johansmeyer said a bond fire needs a gale-force wind to become a conflagration even if has plenty of fuel to burn.

“You have all the ingredients of making a bonfire, but good luck getting that 40 mph wind,” he said.

Washington D.C. Metro police pushed demonstrators out of the Capitol building late Wednesday. Television news coverage showed men with riot-gear bashing out windows to force their way into the building. Ashli Elizabeth Babbit of Oceanside, Calif., who was part of a phalanx that attempted to bust through a barricaded door, was fatally shot during the rally, according to a report in the San Diego Union-Tribune.

The American Property Casualty Insurance Association condemned the assault in a press release.

“Insurers support the peaceful transition of power,” stated President and Chief Executive Officer David A. Sampson. “We are in the business of protecting American families, businesses, individuals, communities, and the larger economy. The actions taking place in Washington, D.C. today threaten the very pillars of our country.”

Bloomberg News reported that hundreds of Trump supporters broke through the gates of the Washington State governor’s mansion in Olympia on Wednesday and called on Gov. Democratic Gov. Jay Inslee to come outside. State houses in Texas, Utah, New Mexico and Georgia were shut down as a precaution.

Johansmeyer told the Claims Journal in November that property owners were taking reasonable precautions to protect their businesses from civil unrest, such as boarding up windows, because of sharp political divisions. He said the wrong comment by any of the two presidential candidates, coupled with an event that looked like a legitimate reason for any group to feel disenfranchised, could set off a powder keg.

Was the presidential election — which President Trump has claimed without evidence was fraught with fraud — just the spark that is needed?

Johansmeyer said Wednesday it is too soon to say, but also that a lot more has to go wrong before there’s any danger of another catastrophic event.

Civil unrest has caused catastrophe-level losses — $25 million or more — only a dozen times since 1950, Johansmeyer said. Until the George Floyd riots, violence that erupted in Los Angeles in connection with the police beating of Rodney King in 1991 held the record for insured losses.

“What we’re looking at is an event in D.C. of significant symbolic importance and obvious cultural significance as well,” he said.

But Johansmeyer said while the assault on the U.S. Capitol is significant for society, the event so far doesn’t appear to be especially significant in terms of property losses. The Capitol building is not located near any shopping district or residential area, he said. And the damage — while shocking to witness — appeared primarily superficial.

Johansmeyer said, for example, more than 200 buildings were damaged on Chicago’s Loop during rioting this summer, but the damages were limited to broken windows and loss of inventory from looting. Similarly, protestors have been vandalizing properties in downtown Portland, Oregon for much of the year, but the losses are limited to a narrow geographic area.

For property insurers, Johansmeyer said, things get dicey when people start setting fires.

“Without fire, the risk of reaching the catastrophe threshold goes down,” he said.

About the photo: Demonstrators gather outside of the U.S. Capitol building in Washington, D.C. on Jan. 6. –Bloomberg News.

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