The world of loss adjustment faced with public demonstrations
Civil disobedience is a vast and variable subject, relevant throughout the world. Including in France. As you will surely remember, 17 November 2018 saw the first of many protests as part of the “Yellow Vest” movement. It was followed by days of violence in Paris and other French cities. On 2 December 2018, the capital alone estimated the damage caused by more than €3 million.
Costly in terms of both tangible and intangible damage, the incidents caused by the various public demonstrations led to unprecedented questions for insurance companies and loss adjustment professionals. At the heart of the issue: operational losses.
From tangible to intangible, operational losses
The damage stemming from the Yellow Vest protests was both tangible and intangible. Tangible examples included burnt-out cars, broken windows, looting and other acts of vandalism. But also intangible because the incidents resulted in emotional and financial prejudice, such as operational losses. Just another challenge for the world of loss adjustment, where being able to adapt is essential.
Factually, an operational loss is a company’s loss of revenue as a result of an event that has a negative impact on normal activity. Traditionally, it requires the existence of tangible damage in the insured property, as well as a link between the operational loss and said tangible damage.
This is significant in the case of the damage linked to the Yellow Vest movement. Indeed, certain companies were closed preventatively as the prefecture ordered them to temporarily stop their activities, as a precaution in response to the protests. Therefore, they did indeed often suffer operational losses. A recurring prejudice, in particular, due to the emergence of other current citizen movements in France.
At the time of civil disobedience
While the Yellow Vest movement waned over time, other protests took the reins, demonstrations for the climate, for example. Such was the case with the Extinction Rebellion (XR) movement. The latest development came on Saturday 5 October 2019 at the Italie 2 shopping center in Paris’s 13th arrondissement. At around 10 am, protesters forced the first shops to pull down their shutters.
Once again, loss adjusters were faced with claims for operational losses caused by tangible damage. Though initially peaceful, the center showed considerable signs of damage: broken windows, shopfronts vandalized with anticapitalistic tags and even stores devastated in their entirety… All these elements required the mobilization of loss adjusters in the wake of the Yellow Vest incidents.
New questions in the world of loss adjustment
Due to these unprecedented public demonstrations, operational losses have taken on multiple dimensions with varying origins and consequences. From the prefecture ordering preventative closures, to acts of vandalism, the insured shopkeepers remain the main victims of the situation. Paradoxically, the insurance world has seen that policyholders have proven to be outstandingly in favor of implementing these preventative measures. The aim is to limit the occurrence of new claims and subsequently, halt growing costs.
Week after week and month after month, the repetitive nature of these incidents has an influence on compensation calculations. They become increasingly complex due to the weekly occurrences that have been taking place for almost a year. Depending on these factors, loss adjusters face certain issues, with support from the insurers. This has raised the question of the frequency of the incidents, and therefore the assessments. Global calculations, per week or per weekend, are additional constraints, making the role of loss adjusters even more important. A few figures to understand the extent of the damage.
In March 2019, more than 10,000 claims were recorded by insurers, 4,000 of which were for businesses and companies. Overall, estimates from loss adjusters enabled €180 million of compensation to be paid out before 16 March, the day of the fire at the famous Fouquet’s restaurant. Unequivocal figures left to the discretion of the insurance companies based on the policyholders’ coverage.
For a long time, the insurance world had not been hit with a movement of a magnitude similar to that of the Yellow Vests, and more recently that of Extinction Rebellion. Following these public demonstrations, various loss adjustment sectors have been taking action, particularly in terms of the ways in which their cases are reported. Working alongside and cross-functionally with available and responsive specialized teams, for both buildings and merchandise. This work results in a total being issued for insurance companies, the first step towards compensation.
Maxime DUBOIS, Loss adjuster
TGS | Stelliant group