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PCS, a unit of Verisk, has announced an expansion of its insurance industry loss index for terrorism risks, with SRCC (Strikes, Riots, Civil Commotions, and Civil Unrest) now being added to the PCS Global Terror Index.
The company said that this enhancement will help the insurance and reinsurance industry in its understanding and management of political violence risks.
The addition of SRCC to PCS Global Terror will provide insurance and reinsurance firms with robust data for the assessment and quantification of risks associated with civil unrest, Verisk explained.
The number of SRCC events have been rising and as a result re/insurers need to accurately assess historical and current loss data for these types of perils, Verisk said.
This addition of SRCC loss data to this industry-loss index can provide companies with a systematic way to measure the frequency and severity of these types of events.
At the same time, the industry-loss index for terrorism can also be used for reinsurance and alternative risk-transfer transactions, such as industry-loss warranties (ILWs).
“PCS has identified over $10 billion in industry wide SRCC losses across 20 events dating back to 2010, compared to less than a billion on the terror side,” explained Ted Gregory, head of global PCS operations at Verisk. “This significant disparity highlights the need for a robust index that reflects the growing severity and frequency of SRCC events. By expanding the view of global political violence, PCS has developed an index that will help enable the market to trade SRCC on a standardized platform with an established methodology.”
Alex Mican, head of PCS global strategy and growth at Verisk, added, “The existing global terror (re)insurance market is small, but there’s a widespread view that it will grow significantly over the next decade. However, some structural changes are needed to facilitate its development. One important development will be the further entry of capital markets capacity to provide both reinsurance and retrocessional protection for companies assuming SRCC risk.”
Insured losses caused by unrest have risen to reach new highs in recent years, with SRCC risks rising in more than 50 percent of countries over the last 12 months, according to Verisk Maplecroft.
Verisk says that reinsurers have observed these losses and are now actively evaluating tools to support additional capacity and monitor this risk, with risk transfer becoming an increasing priority to manage exposures.
The SRCC enhancement to the PCS Global Terror Index product can help re/insurers access capacity from new markets, while it can also help exposed corporates such as multinational brands, retailers, and banks in understanding their exposure and whether their insurance coverage is sufficient.
Verisk’s PCS expands Global Terror Index to include SRCC was published by: www.Artemis.bm
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