Verisk, the data analytics and technology provider, has unveiled a first-of-its-kind catastrophe model designed to quantify the financial impacts of strikes, riots, and civil commotion (SRCC) in the United States.The move comes in response to rising insurance losses stemming from large-scale civil unrest, which have become increasingly frequent and severe.Since 2010, SRCC events have generated more than $10 billion in insured losses globally, ten times the amount attributed to terrorism over the same period.In just the past six years, there have been five SRCC events worldwide that each caused more than $1 billion in insured losses, with U.S.-based unrest alone accounting for around $3 billion.

According to the announcement, Verisk’s new SRCC model assesses event severity by analysing a combination of social and economic drivers, political dynamics, and historical protest patterns.The model, which draws from nearly 40 years of catastrophe modeling through Verisk’s Extreme Event Solutions business and over 15 years of political violence data from Verisk Maplecroft, is integrated into the organisation’s Touchstone platform.The new model aims to support exposure management and underwriting strategies by estimating insured losses and providing detailed insights down to ZIP code-level risk.

As well as this, it can also assess tail risk through a catalogue of “stochastic” events which feature scenarios that are inherently plausible, but far worse than anything seen historically.The model can also address risk management and regulatory requirements by stress testing extreme disaster scenarios to check for any potential vulnerabilities before real disasters occur.While SRCC risks are not yet a widespread feature of the insurance-linked securities (ILS) market, there have been instances where retrocession arrangements covering SRCC exposures have attracted third-party capital.

These cases remain relatively niche, but demonstrate potential for future growth, particularly if better modeling capabilities like Verisk’s help build investor confidence.Sam Haynes, vice president of data and analytics, Verisk Maplecroft, commented: “Over recent years, unrest in the U.S.highlighted the necessity for insurers to have a comprehensive understanding of potential political risk hazards.

“A 1 in 1,000-year SRCC event could cause losses 10 times greater than those from the 2020 protests, while very low-probability SRCC tail events could potentially impact commercial and municipal properties at the ZIP code level nationwide, the majority of which are located in metropolitan areas.” Shane Latchman, managing director of Verisk Extreme Event Solutions team in London, said: “Verisk’s goal is to empower insurers covering political violence and terrorism risks to enhance their underwriting strategies through insights on the riskiness of exposures.This will facilitate informed decisions on insurance pricing, capital allocation, risk management and mitigation.“Ultimately, this SRCC Model enables underwriters to balance risk and premium effectively and allow insurers to effectively model this risk,” he concluded.

It’s worth also noting that back in 2023 Verisk unit .Then, in 2024, ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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