Chaucer, a global group specializing in insurance, has announced a significant increase in demand for coverage against cartel violence following a rise in incidents caused by these criminal groups in the LATAM region.
The product against these violent incidents is available as an extension of Strike, Riots, and Civil Commotion (SRCC) insurances. The policy for “coverage against organized crime” covers material damages resulting from the activities of the cartels in Mexico, Guatemala, Honduras, and El Salvador.
The cartels have become a major issue for businesses in Mexico and throughout Central America. In 2018, the Mexican president stated that the cartels were stealing USD $3 billion annually in state fuel and pipelines.
There has been an increase in demand from hotel operators, as cartel activity has become more prevalent in major tourist destinations, including places like Cancun, which had previously been less affected by the violence of criminal groups.
Gabriel Mayorga, a political violence underwriter at Chaucer, states that there is strong demand for this type of insurance from both the retail sector and major hotel operators in the region.
Last year, the Mexican Chamber of Commerce warned that organized crime was putting Mexican companies at a more direct risk following a fiery cartel attack on 25 OXXO convenience stores in western Mexico.
This attack, which was in response to the arrest of key cartel members, also involved street blockades with burning vehicles.
“Our product provides companies operating in Central America with greater security in case they fall victim to cartel activity.
“Offering this tailored coverage is an excellent example of how the insurance sector is evolving to protect clients, giving them the necessary confidence to operate in regions where organized crime prevails,” explained Gabriel Mayorga.
The cartels have a significant stake in the underground economy. A 2011 report by the United Nations estimated that worldwide revenues from drug trafficking and transnational organized crime amount to 1.5% of the global GDP, equivalent to USD $870 billion.