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Verisk's enhanced U.S. demand surge framework
The enhanced U.S. demand surge framework is new for Verisk Synergy Studio v1.0.0.

Overview of demand surge
Provides an overview of the demand surge frameworks supported in Verisk Synergy Studio v1.0.0.
Verisk's standard demand surge framework
The standard demand surge framework uses the industry loss for a given event, and looks that up in a table which provides demand surge factors based on the level of industry loss experienced.
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.
Verisk's enhanced U.S. demand surge framework
The enhanced U.S. demand surge framework is new for Verisk Synergy Studio v1.0.0.
- Labor disruption hazard
  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
  Post-event construction cost inflation captures construction cost increases over the average time required to rebuild and settle claims.
- Integrated demand surge calculation
  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.
- Demand surge enhancements for U.S. perils
  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.
Model validation and applications

Verisk's enhanced U.S. demand surge framework

The enhanced U.S. demand surge framework is new for Verisk Synergy Studio v1.0.0.

The framework for enhanced demand surge is built on three core principles:

Demand surge arises from identifiable economic drivers.
Those drivers vary by peril, geographic location, and event size.
The duration of rebuilding and claim settlement is a critical determinant of reconstruction cost increases.

Demand surge is therefore modeled as the combination of both the disruption to the local construction labor market and reconstruction costs inflation over claim settlement timelines.

The goal is to quantify the disruption to the construction labor market and cost inflation over the claim settlement time. For some events, other sources of loss inflation can further extend reconstruction and claim settlement times. For example, extensive infrastructure damage after large natural catastrophes can prolong disaster cleanup and recovery timelines, delaying the start of reconstruction. The new framework captures these extended timelines through its modeling of claim settlement time.