The standard demand surge (legacy) framework is available in Verisk Synergy Studio v1.0.0.

The enhanced U.S. demand surge framework is implemented for select U.S. models in Verisk Synergy Studio v1.0.0.

The enhanced European demand surge framework is implemented for select European models in the Verisk Synergy Studio v1.0.0.

Comparison of the demand surge frameworks available in Verisk Synergy Studio v1.0.0.

Overview of the economic drivers of demand surge and the methodologies used to model its impact on insured losses following large catastrophe events.

A demand surge function is derived from a variety of factors, including catastrophe type, geography, demand, business type, regional capacity, prices and indices.

We can gain insight into the inflationary effects of catastrophes by tracking material and labor price changes in affected regions in the immediate aftermath of an event.

The demand surge analysis feature in Verisk Synergy Studio allows you to adjust analysis results to reflect the impact of demand surge.

Demand surge increases when multiple large events occur close together in time and location, as rebuilding from earlier events is still underway, leading to greater pressure on regional labor and resources.

Demand surge varies across coverage types. Building-related coverages show increasing effects, contents remain largely unaffected, and time element losses increase at a significantly higher rate due to delays in reconstruction.

The development and validation of the demand surge function are limited by scarce and inconsistent historical data, requiring reliance on expert judgment, research, and continuous refinement.

The results of stress tests quantify the impact of varying demand surge functions on average annual loss (AAL) and exceedance probability losses.

Validation of the demand surge function is constrained by the limited availability of historical data especially for extreme events, requiring reliance on expert judgment and supplementary evidence to support the function’s applicability.

Steps involved in the calculation of demand surge using detailed construction cost data and component analysis from 2004’s Hurricane Charley.

Understanding demand surge in Europe requires identifying significant catastrophe events and analyzing post-event price data to assess their impact on construction costs.

These case studies review historic storms that affected Europe, their implications for excess demand for reconstruction, and the impact on costs following the events.

The Touchstone public API now supports a country-specific loss inflation model that is applied for the whole year instead of per event.

Summarizes the impact of demand surge on loss estimates across European models and perils, with supporting tables showing total and country-level loss changes.

Future events in Europe may be influenced by evolving economic conditions, labor mobility, and improvements in construction cost data.

The labor disruption hazard component captures the potential increase in construction labor costs caused by an insufficient local supply of workers following a catastrophe.

Post-event construction cost inflation captures construction cost increases over the average time required to rebuild and settle claims.

The integrated demand surge calculation combines labor market disruption hazard and post-event construction cost inflation components to estimate the total demand surge impact for each model year.

The enhanced U.S. demand surge model estimates post-catastrophe increases in reconstruction costs for select U.S. perils by modeling construction labor disruption and cost inflation at peril- and state-level resolutions.

Historical catastrophe events provide empirical evidence of demand surge and demonstrate how reconstruction timelines, labor market disruption, and construction cost inflation influence post-event losses.