The Parametric Post is InsTech London’s newsletter dedicated to parametric insurance. Sign up for free using the form at the bottom of the page. This week’s issue (8 July) discusses embedding parametric insurance products and includes the latest news and case studies from companies offering parametric solutions.
We have also profiled over 50 companies active in the parametric insurance space in our report Parametric Insurance – 2021 outlook and the companies to watch, which is available to download. The report is free to InsTech London corporate members, who can contact [email protected] to get access.
Thought for the day… embedding parametric insurance
The costs of selling insurance products are insurers’ highest costs apart from claims. With parametric insurance, educating customers is normally an added challenge. Embedding parametric products at the point of purchase gets the insurance closer to the customer, expands the potential market size and can help reduce the education challenge. Embedded insurance is a hot topic right now, with parametric examples including cancellation coverage when booking flights or drought coverage when buying seeds for crops.
Our latest InsTech London report, released last week, explores the topic of embedded insurance and profiles more than 50 companies who are embedding insurance products, including parametric insurance. Robin writes, “the embedded client experience requires quick compensation and therefore automated (or near automated) payments,” making parametric products well suited to being embedded.
US • Supply chain
An air shipment of seafood monitored by Parsyl was exposed to a problematic temperature, the parametric trigger was activated and the claim was settled in 7 hours 40 minutes. Matthew spoke to Ben Hubbard, CEO and Co-founder of Parsyl, on InsTech London podcast episode 123 about the company’s IoT-enabled parametric insurance policies covering perishable cargo.
Embedded • Travel
Robin hosted guests from Wakam, Qover and Railsbank to discuss embedded insurance in our latest webinar, available to watch on demand. Wakam’s Chief Revenue Officer Franck Pivert explains how Wakam is able to embed parametric products for flight and ferry delay within travel bookings.
Mexico • Earthquake • Health
Súper, which offers parametric insurance policies for earthquakes and COVID-19 hospitalisation in Mexico, has raised $7.2 million in Series A funding led by ALLVP. Súper is an MGA, with capacity provided by Munich Re and General de Seguros.
France • Agriculture • Weather
Heat stress can cost a dairy farm up to $400 per cow every year in decreased milk yield. Skyline Partners and agriculture technology company ITK have collaborated on a parametric insurance product to protect dairy farmers in France against lost revenue due to heat stress. Watch their webinar at 17:00 BST on Thursday 8 July to learn more.
APAC • Agriculture • Weather
The Demex Group and Global Parametrics are structuring parametric protections for smallholders in the Philippines and Vietnam. The coverage for agricultural cooperatives in the Philippines protects against hydrometeorological risks. In Vietnam, coverage protects coffee farmers against extreme rainfall.
A common type of parametric insurance policy is ‘Cat in a Box’, which is a policy that pays out when a catastrophe occurs within a pre-agreed area. Arun Mehta, Senior Structurer at Swiss Re, explains how a Cat in a Box solution works, using cyclone coverage as an example.
Hawaii • Hurricane
First Insurance Company of Hawaii (FICOH), part of the Tokio Marine Group, has expanded its FirstTrack parametric insurance product, available to renters and homeowners in Hawaii from $45 per year. The supplemental coverage protects policyholders against tropical storms and hurricanes, based on wind speed data from the National Hurricane Center.
Kenya • Agriculture • Weather
The InsuResilience Solutions Fund, set up at the 2017 UN Climate Conference, has signed a grant agreement backing an insurance scheme for smallholder farmers in Kenya. Microinsurance provider ACRE Africa and satellite data provider VanderSAT have collaborated on the project which uses soil moisture index insurance.
Japan • Earthquake • Catastrophe bond
White Rock Insurance, managed by Aon, has issued a parametric catastrophe bond for $68 million for an unknown sponsor. It will provide reinsurance or retrocessional coverage against losses from earthquakes in Japan. Approximately 15% of catastrophe bonds issued in the last 20 years have used parametric triggers.
Colombia • Agriculture • Weather
Bilal Mughal, CEO of Blue Marble Microinsurance, explains how his startup partnered with Nespresso and the Government of Colombia. Its parametric policies, underwritten by Seguros Bolívar, protect Colombian coffee farmers against excess and lack of rain.
France • Energy • Payments
Energy data startup Lite has worked with insurance platform Seyna on a parametric product for electricity bills. Using weather data and electricity consumption records from internet-connected meters, customers are compensated if bad weather results in high electricity bills. The product is designed to reward households who commit to lower energy usage.
Colombia • Agriculture • Weather
The British Embassy in Colombia is calling for bids to design and pilot a weather index insurance product for cocoa farmers in the country, as part of the UK-Colombia Prosperity Programme. The deadline to submit bids is 23 July and the budget for the pilot is £400,000.
Jamaica • Hurricane • Catastrophe bond
The World Bank’s project to issue a parametric catastrophe bond to Jamaica has had grant agreements signed, after three years of negotiations. The bond will protect the Jamaican government against losses from hurricanes.
North America • Agriculture • Weather
The legalisation of cannabis in large parts of North America has created demand from cannabis growers for insurance products, but outdoor farms are difficult to insure with traditional policies due to the drug’s high value. Broker HUB International is now selling parametric insurance policies for cannabis farms.
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