Verisk, a data analytics and technology firm, has introduced a catastrophe model designed to assess the financial impact of strikes, riots, and civil commotion (SRCC) in the U.S. This new tool responds to rising insurance losses from recent large-scale civil unrest.
The Verisk SRCC Model evaluates risk severity by analyzing social and economic indicators, political conditions, and past protest activity.
It supports exposure management and catastrophe modeling teams with insights to assess potential financial outcomes at both individual site and enterprise levels.
The SRCC Model combines almost 40 years of catastrophe modeling expertise from Verisk’s Extreme Event Solutions business with 15+ years of experience from its global risks business, Verisk Maplecroft, in quantifying political violence.
This unique approach offers insurers and reinsurers a compelling solution that will enable them to:
- Estimate potential insured losses from SRCC events and quantify the potential financial impact of risk for individual locations and at the enterprise level.
- Create robust underwriting guidelines to specifically account for SRCC related damage and associated business interruption.
- Assess tail risk through a catalog of stochastic events which feature scenarios that are inherently plausible, but far worse than anything that has been seen historically.
- Address risk management and regulatory requirements by stress testing extreme disaster scenarios to reveal potential vulnerabilities before real disasters occur.
The SRCC Model is available through Verisk’s Extreme Events Solutions’ Touchstone platform and includes capabilities to estimate insured losses from SRCC events, develop underwriting guidelines, and account for business interruption.
SRCC events have led to over $10bn in global insured losses since 2010, significantly outpacing terrorism-related losses.
In the past six years alone, five SRCC incidents have each caused losses exceeding $1bn, including $3bn in the U.S.
The model includes a stochastic event catalogue that allows users to explore severe yet plausible scenarios beyond historical precedent. These features support stress testing for risk management and regulatory compliance.
Sam Haynes, Vice President of Data and Analytics at Verisk Maplecroft, stated that recent unrest has shown the importance of understanding political risk exposures. He noted that a 1-in-1,000-year SRCC event could produce losses ten times greater than those from the 2020 protests, with the potential to affect ZIP code–level properties, especially in urban areas.
Over recent years, unrest in the U.S. highlighted the necessity for insurers to have a comprehensive understanding of potential political risk hazards
Sam Haynes, vice president of data and analytics, Verisk Maplecroft
“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,” said Sam Haynes.
Shane Latchman, Managing Director of Verisk’s Extreme Event Solutions in London, added that the SRCC model helps insurers strengthen underwriting strategies and make informed decisions on pricing, capital allocation, and risk mitigation.
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
Shane Latchman, managing director of Verisk Extreme Event Solutions team in London
“Ultimately, this SRCC Model enables underwriters to balance risk and premium effectively and allow insurers to effectively model this risk,” said Shane Latchman.
