Insurers Should Be Treating SRCC Risk with the Same Rigour as Nat Cat

6 January 2026 / 4 min read

For years, there has been an increased need for the insurance industry to strengthen how it assesses and manages strikes, riots, and civil commotion (SRCC). With civil unrest events becoming more frequent and costly, that call is increasingly relevant.

group-of-protesters

Few would dispute that the world feels more unstable than ever. Political divides are widening, societies are becoming more polarised, and social media echo chambers have become integral to how we access and interpret information.

For insurers, this emerging landscape has profound implications. While the political violence and terrorism (PVT) class has long been on the industry's radar, its nature is changing. For the strikes, riots, and civil commotion (SRCC) peril specifically, risk quantification methods are often rudimentary, relying on simple proxies such as ring-based accumulation of exposure across locations and cities.

Simply mapping where unrest has occurred is no longer sufficient. The real challenge lies in understanding how social tensions, political instability, and economic stressors interact to spark riots capable of inflicting billions of dollars in insured losses. For insurers and reinsurers, this isn’t a distant risk—it’s a growing exposure that can ripple across investment holdings and regional markets without warning.

Understanding SRCC

SRCC has been around for decades, but the frequency of severe events is at an all-time high. Since 2019, just five major events across the globe have collectively resulted in some $10.5 billion in insured losses. Clearly, insurers need to understand this peril.

Losses-from-SRCC

Historically, the majority of SRCC losses have occurred in regions with high population density and substantial economic activity. The rationale is clear: larger populations increase the likelihood of sizable protests, which in turn can escalate into violent events. When combined with the presence of assets susceptible to looting, vandalism, or arson, these factors help explain many SRCC losses. However, population and economic density alone are insufficient as predictive indicators. For example, both Singapore and Japan are highly populated, yet they exhibit relatively low SRCC risk. This underscores the need for insurers and reinsurers to adopt more sophisticated risk models that account for social, political, and institutional factors in addition to exposure concentration.

The key to predicting SRCC lies in the interplay of social, political, and economic factors -and how these combine with the size and intensity of recent protests in an area. In other words, SRCC cannot be understood through an area’s population density and property values alone. It’s a complex peril, shaped by cultural dynamics that influence whether and how people are likely to protest.

SRCC: A key area for development highlighted by Lloyd’s

Lloyd’s has undertaken significant work to better understand how its syndicates manage PVT exposure, and its 2024 deep dive into PVT exposure management provided valuable insights into market practices.

While many syndicates had frameworks for terrorism and war on land, Lloyd’s found the management of SRCC exposures to be underdeveloped. SRCC risk management often relied on static assumptions and internal models that may not fully reflect the evolving nature of civil unrest. Cross-class and cross-territory aggregation was not always systematically tested, which could lead to unintended concentrations of risk.

Lloyd’s PVT deep-dive report encourages the market to continue strengthening its approach to SRCC by embedding forward-looking, comprehensive frameworks, improving aggregation oversight, and enhancing governance structures. It is recommendedthat SRCC be managed with the same level of rigor as other major perils, such as natural catastrophe, to support long-term resilience and sustainable underwriting.

How to better manage SRCC risk

Insurers aren’t expected to function as political risk specialists or build dedicated internal research teams. Their priority remains managing their core business while leveraging advanced analytical models and data to assess and mitigate SRCC risk. Taking cues from the industry’s approach to natural catastrophe, tackling SRCC risk requires using analytical models and data to reflect how modern unrest fires up and escalates.

More importantly, treating SRCC with the same rigor as natural catastrophe doesn’t mean these perils are the same. In fact, SRCC events unfold very differently: for instance, commercial and municipal buildings are the primary targets, sparing residential ones, and these events typically are highly geographically concentrated to where commercial activities are located. According to Verisk’s SRCC model for the U.S., 90% of average annual losses come from just 2.5% of the country’s ZIP codes.

The industry’s treatment of SRCC is beginning to mature, but to manage this peril effectively, insurers must look to the exposure management techniques and governance standards used for other major perils. That means being rigorous, transparent, data-informed, and forward-looking.

This content reflects industry commentary informed by Lloyd’s insights and does not constitute an official statement from Lloyd’s

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