Replacing indemnity insurance with parametric - The Parametric Post Issue 15

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The InsTech perspective… replacing indemnity insurance with parametric

Climate • InsTech podcast

Most parametric insurance products have been used either where the policyholder had no coverage before, or in addition to existing coverage to boost resilience against a particular peril. As more advanced products are available and awareness increases, parametric insurance can be used differently.

Sébastien Piguet, Co-founder and Head of Underwriting at parametric insurance MGA Descartes Underwriting, highlighted a growing trend on InsTech London podcast episode 165. He told us, “more companies are replacing indemnity insurance with parametric insurance policies,” explaining that in some areas of coverage risk managers believe that parametric insurance offers more certainty than traditional coverage. You can listen to or read the full discussion on the InsTech London website.

Crypto capital for insurance start-ups

Blockchain • Crypto • InsTech podcast

Ensuro aims to make it easier for parametric insurance start-ups to access insurance capacity by using cryptocurrency as an alternative to traditional insurance capital. We interviewed Marco Mirabella, Founder & CEO of Ensuro for InsTech London podcast episode 164. Marco told us why blockchain and parametric insurance are a good match and spoke about the pilot project Ensuro is working on.

Member spotlight: Capital Law

UK • InsTech interview

Rachel Hillier, who leads Capital Law’s team of insurance and financial services regulatory lawyers, explains how parametric insurance fits into the regulatory and legal framework for insurance products. She told us, “For policy drafting, companies need to provide their customers transparent and clear information about the trigger and payment.” The interview includes insights from Capital Law’s experience working with insurtechs such as FloodFlash.

In the news...

Vave embeds parametric temperature coverage into property policies

US • Temperature • Embedded

Vave, an algorithmic MGA and part of the Canopius Group, has partnered with The Demex Group to create extreme temperature insurance coverage for small and medium-sized businesses. It is designed to compensate businesses for cost overruns and revenue losses linked to extreme temperature. The coverage will be offered on all Vave’s US commercial property insurance policies and will provide pay-outs of up to $1,000.

Descartes partners with the Global Earthquake Model Foundation

Earthquake

The Global Earthquake Model Foundation (GEM), a public-private partnership focused on earthquake risk, is collaborating with Descartes Underwriting to reduce the earthquake insurance protection gap (the difference between total losses and insured losses). Less than one fifth of global earthquake losses in the last decade were covered by insurance. The two organisations will work together on hazard analytics and technology and support the development of parametric earthquake insurance structures.

Howden partnership combines parametric insurance and public safety

Humanitarian aid • Volcano

Broker Howden Group has partnered with Everbridge, a software company for critical event management and public warning systems. The partnership aims to combine parametric insurance and public safety technology for governments, non-governmental organisations and charities. Charlie Langdale, Head of Climate Risk and Resilience at Howden, said, “Whilst Everbridge’s public warning systems mobilize the people needed to respond to disasters, parametric insurance can mobilize the capital to fund the response.” Earlier in 2021 Howden was involved in issuing a catastrophe bond covering volcanic eruptions for the Danish Red Cross.

Irish government grant enables expansion of CCRIF fisheries insurance

Caribbean • Agriculture

The Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) has accepted a grant of €1 million from the Irish government through Irish Aid. The grant will fund the rollout of CCRIF’s COAST product, parametric insurance for the fisheries sector triggered by wave height, rainfall, wind or storm surge. The product was launched in 2019 and has been used by Grenada and Saint Lucia since. The grant will enable five more countries to access COAST coverage. The Irish government previously made a €1 million contribution to CCRIF in January 2019.

Start-up launches tropical cyclone cover in Australia

Australia • Tropical cyclone

MGA Redicova has launched a parametric wind insurance product for households and businesses in Northern Australia. Policies are backed by members of the Lloyd’s Disaster Risk Facility Beazley, AXA XL, Hiscox and RenaissanceRe. The policy pays out when tropical cyclones of category 3 or above pass over an insured location using data published by the Australian Bureau of Meteorology.

Planet acquires parametric data provider VanderSat

Rainfall • Satellite

VanderSat, which provides satellite-observed data on soil moisture and other earth conditions, will be acquired by data provider Planet for $28 million. The transaction, expected to close before the end of 2021, will allow Planet to build more insurance offerings. VanderSat is partnered with Swiss Re Corporate Solutions, AXA Climate and Descartes Underwriting on parametric insurance solutions.

K2 Parametric: new parametric insurance MGA

US

Specialty insurance holding company K2 Insurance Services has started an MGA dedicated to parametric insurance. K2 Parametric will be based in California and led by Scott Carpinteri, who previously worked on parametric insurance at Swiss Re Corporate Solutions.

Parametric crop insurance launched in India

India • Agriculture • Weather

The Agriculture Insurance Company of India has announced the launch of a parametric weather insurance scheme for the agriculture sector. Pay-out triggers include excess rainfall, drought, unseasonal rainfall and inadequate distribution of rainfall. The scheme has been piloted in the current growing season with an agricultural warehousing company, and paid out $9,100 in one location for adverse weather conditions.

Fund your PhD project on parametric insurance in West Africa

UK • Africa

Applications are open for a funded PhD project titled “Precipitation-based parametric insurance for West Africa” at the University of Reading’s Department of Meteorology. The project is supported by Willis Towers Watson and the Red Cross Red Crescent Climate Centre. The application deadline is 21 January 2022.

Find out what you've missed...

Issue 14 - COP26: the implications for parametric insurance

Issue 13 - A new data source for parametric flood insurance

Issue 12 - Parametric policies for humanitarian organisations

 

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