Verisk's framework

Demand surge was extended to Europe in 2023 through calibration of the demand surge model using available regional economic data, enhancing its ability to capture demand surge impacts across various perils.

Europe has always been an area of interest, but there have been challenges in understanding the extent of demand surge—partly because of the limited number of events that could cause demand surge and the lack of corresponding data to measure the price response. Unlike for the United States, price data for local construction markets are not readily available from one consistent source in Europe. Where data is available, many of the time series are not long enough to coincide with natural catastrophes that have an increased demand for additional work and trigger demand surge.

There is evidence that extratropical cyclones (ETC) in 1990 and 1999 caused demand surge but understanding the extent of demand surge is difficult. Data measuring price changes for materials and labor is only available for a few countries and much of that is only available at the country level, which is at a suboptimal resolution. For some countries, we had to rely on less detailed construction cost data; for others, the data just did not exist. In addition, the free movement of labor and materials across sovereign borders within the European Union has been in flux.

We first look at the economic theory that explains demand surge via changes in market equilibrium, then we consider how the cost data in the U.S. can be used along with the available European economic data to understand the phenomenon in Europe. We also look at case studies of the ETC experience of 1990, 1999, and 2007 along with the data that supports a conclusion that there was demand surge, as well as the data that does not.