France’s insurance industry is bracing for potential losses of up to €1.2 billion from widespread riots that have damaged shops and public buildings, with private insurers expected to bear the cost as a state-backed compensation mechanism has yet to take effect.
Global credit rating agency DBRS Morningstar said on Oct 20 that insured losses from riots that erupted in major French cities on Oct 17 could reach €1.2 billion, assuming the violence does not escalate further.
If the estimate reaches its upper limit, it would represent the largest insurance loss from civil unrest ever recorded in mainland France.
The unrest began with cost-of-living protests that drew more than 500,000 people onto the streets nationwide. Labour unions, farmers and retirees joined high school and university students who had been protesting for weeks over educational conditions, with demonstrations also targeting rising prices and fuel costs.
The protests subsequently escalated into arson and looting in cities including Paris, Marseille, Lyon and Bordeaux. In Limoges, a city in central France, the town hall caught fire and its clock tower collapsed.
The French Interior Ministry said 2,397 people were arrested in a single day.
Businesses suffer widespread damage
French retailer Carrefour said on Oct 20 that 50 of its stores had been damaged, including 20 that were looted.
In Marseille, luxury retailers including Louis Vuitton and Kenzo were heavily looted.
Alain Di Crescenzo, head of the French Chamber of Commerce and Industry, said more than 2,000 establishments had been directly affected, with losses alone expected to reach hundreds of millions of euros.
According to figures compiled by DBRS Morningstar and the French Insurance Federation, insurers paid about €200 million in claims following riots that lasted around three weeks in the autumn of 2005 in immigrant-concentrated suburbs of Paris.
The ‘yellow vest’ protests between 2018 and 2019, which were triggered by opposition to fuel tax increases, resulted in €220 million in insured losses.
Before the latest unrest, the largest insurance loss from riots in mainland France was €793 million in the summer of 2023.
Those riots erupted after 17-year-old Nahel was shot dead by police during a traffic stop in Nanterre, west of Paris. The violence continued for 11 days across 672 municipalities nationwide.
France Assureurs said insurers received 16,400 claims arising from the unrest.
Including territories outside mainland France, the largest loss in French history was recorded during the May 2024 unrest in New Caledonia, a French territory in the South Pacific. Riots over electoral reform resulted in insured losses of about €1 billion on the island.
The latest estimate of €1.2 billion exceeds these previous records. It is €407 million higher than the 2023 losses and 20% above the figure recorded during the New Caledonia unrest.
Compared with the riots in Paris’ suburbs in 2005, the estimated losses have increased sixfold.
DBRS Morningstar analyst Marcos Alvarez told the Financial Times that riots in France were increasingly resembling natural disasters.
‘In recent years, street violence has become very intense and widespread,’ he said.
Uninsured damage could raise the economic cost
The overall economic impact is expected to exceed insured losses because some damage falls outside private insurance coverage.
Standard French property insurance and comprehensive motor insurance typically cover fire or vandalism. However, vehicles insured only under third-party liability policies are excluded from coverage for damage to the policyholder’s own vehicle.
Such policies cover damage caused to other vehicles or people while driving. They are the minimum insurance required by law and are often chosen by drivers of older vehicles because of their relatively low premiums.
As a result, owners may receive no insurance payout if their vehicles are damaged or burned during riots.
Looting and theft may also fall under policy exclusions or be subject to coverage limits. Damage to shopfront windows can carry a separate deductible.
Business interruption losses are also restricted. Shops that close during protests may receive only partial compensation if they have purchased an additional business interruption policy, and coverage generally requires actual physical damage.
During the 2023 riots, insured losses amounted to €793 million, while a French Senate task force estimated property damage at nearly €1 billion.
UK law firm HCR told insurance trade publication Insurance Business that strict policy conditions could leave more claims uncompensated. These include requirements to report riot-related losses within seven days, a shorter period than that allowed for ordinary claims.
French government considers support measures
As the unrest escalated, Prime Minister Sébastien Lecornu said on Oct 19 that the government would extend a partial unemployment scheme to help cover some wages at damaged businesses.
An emergency cabinet meeting chaired by Lecornu also considered a proposal for new legislation that would require riot participants to pay repair costs.
Finance Minister Roland Lescure met representatives from banks and the insurance industry on Oct 20 to discuss support measures for affected businesses.
However, a decree allowing the state to share losses from riots in a manner similar to compensation arrangements for natural disasters has yet to take effect, leaving private insurers facing the prospect of bearing the insured losses.
Euronews noted that the cost of government assistance would add to pressure on France’s public finances, with the fiscal deficit projected at 5.4% of gross domestic product this year and national debt at 119% of GDP.
