by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Following the death of George Floyd, the world’s largest insurance companies spoke up in favor of Black Lives Matter. Even as they were paying out unprecedented claims due to the destruction caused by Black Lives Matter protesters and those seizing their mantle, the companies issued statements and coughed up donations to support the movement.
This summer’s unrest cost the industry more than a billion dollars in riot damage, the largest such loss in U.S. history. Those losses are now in danger of affecting employees’ pay, industry insiders said, but not their employers’ stance: As of February 18, Chubb was planning a panel with Black Lives Matter whose promotional materials included a pro-Black Panther documentary and an enjoinder to “stay woke,” according to emails reviewed by the Washington Free Beacon. …
… At first glance, the stance adopted by insurance giants might seem like a case of ideology trumping interests. Why would these corporations donate to a movement that had cost them billions, unless they had decided to put social justice over shareholders?
But something funny happened: Shareholders didn’t lose money from the unrest. Instead, insurance stocks rose in the face of riot-related payouts. Chubb and AIG finished 2020 in about the same financial condition they entered it, overcoming a COVID-induced shock that temporarily wiped out their gains from the previous year.
That may be because the insurance industry stands to profit from the destruction in the long run, one economist suggested—especially as many of the destroyed businesses were underinsured.
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.