Artificially-created Insurance Loss Estimates from Civil Disturbance Forecasts
In the realm of risk management, two significant factors are causing a stir among industry experts: the potential outcomes of a catastrophic earthquake along the Cascadia Subduction Zone in the U.S., and the growing threat of civil unrest worldwide.
Allianz Global Corporate & Specialty (AGCS) has issued a report warning of increasing civil unrest and protests, citing anger over growing social inequality, cost-of-living issues, declining faith in governments and institutions, polarized politics, and rising activism as potential causes. This global trend has already been evident in various parts of the world, with tensions remaining high in France following recent riots and civil unrest.
Meanwhile, the insurance industry is gearing up to address these complex risks. RMS (Risk Management Solutions) has created a detailed response to Lloyd's 2025 scenario for strike, riot, and civil commotion (SRCC) and uses its advanced technological platforms for risk assessment and catastrophe modeling to evaluate potential losses from SRCC events following an earthquake along the Cascadia Subduction Zone in the USA.
Synthetik Insurance Technologies has also taken up the challenge, producing a detailed response to the Lloyd's 2025 SRCC Extreme Disaster Scenario (EDS). Their advanced modeling platform, srccQuantum, was used to evaluate potential losses from SRCC events triggered by societal reactions following such a catastrophic earthquake. Josh Hatfield, Chief Product Officer of Synthetik, emphasized the critical importance of adopting advanced modeling practices to effectively anticipate and mitigate SRCC exposures.
The modeling addressed two distinct types of SRCC events: organized demonstrations in major North American cities and dispersed civil unrest in smaller towns and cities along the West Coast directly impacted by the earthquake. The report includes predicted losses and risk maps for cities such as San Francisco, New York, Vancouver, and Washington DC.
Verisk, a global analytics and data provider, is taking a different approach to the long-standing exclusion of civil unrest from insurance coverage. They are responding to escalating insurance losses from large-scale civil unrest events in recent years. Vulnerabilities in second-tier and regional cities, which have been historically considered lower risk, show indications of latent exposure.
DBRS Morningstar has offered commentary on the insurance implications of the recent riots and civil unrest in France, as well as the insurance implications of potential outcomes from a catastrophic earthquake along the Cascadia Subduction Zone. Tim Brewer, Chief Operating Officer of Synthetik, stated that SRCC has transitioned from a secondary concern to a central focus within the political violence market and for broader all-risk property policies.
The srccQuantum platform provides insurers with a robust, predictive analytical tool to address these complex risks, facilitating more accurate pricing, improved reinsurance structuring, and enhanced portfolio management strategies. As the world grapples with these challenges, the insurance industry is stepping up to provide solutions and mitigate potential losses.
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