The Parametric Post, the only newsletter dedicated to parametric insurance.
Thought for the day… epicentre of innovation
Most of us are impacted by recency bias. We give disproportionate weight to recent events or experiences when making decisions while underestimating the significance of older events. Wildfires, floods, severe convective storms and hurricanes are all driving major insured losses, and inspiring creative ideas for parametric solutions. But what about earthquakes? A repeat of the 1994 Northridge earthquake today is estimated to cause insured losses of over $30 billion USD and economic losses of $150 billion USD. And earthquake insurance has become a lot more expensive and harder to get since 1994.
Fortunately, there is a parametric solution now available that works at the building level, using sensors that are low-cost to deploy and which are being used to provide cost-effective insurance in California and around the world. These sensors are being used alongside but independently of the USGS data available from tools such as ShakeMap.
If you are interested in learning more about how these applications are working and some real client success stories, you can review our webinar from last week where Matthew Grant spoke to Andy Thompson, CEO of Safehub, David Ward from USGS and Jean-Christophe Garaix of Liberty Mutual Reinsurance.
Planet watch — how satellites are changing risk
InsTech podcast • Flood • Wildfire
In a recent episode of the InsTech podcast, Matthew Grant interviewed Berend de Jong, the Global Insurance & Finance Lead at Planet Labs, discussing the role of high-resolution satellite imagery in the insurance sector. Planet Labs operates a fleet of over 200 satellites, providing daily images that enhance risk modelling and insurance solutions, particularly for natural disasters like floods and wildfires. This episode delves into practical applications of satellite data, showcasing its significance in incident analysis for events such as the Los Angeles wildfires and German floods. The discussion also covers the integration of this technology in parametric insurance, highlighting collaborations with insurers such as AXA and Swiss Re to refine underwriting and claims processes.
In the news…
Aon, Floodbase, and Swiss Re partner on storm surge insurance
US • Storm • Flood
Aon, together with Floodbase, a parametric platform specialising in flood risk, and Swiss Re Corporate Solutions has launched a new parametric insurance product for managing financial losses due to storm surges from hurricanes along the US coast. This product uses meteorological data to determine storm surge water heights, facilitating payouts based on specific water level thresholds. The parametric model aims to provide prompt financial responses, addressing gaps in traditional insurance policies that may have high deductibles or exclusions for storm surge risks.
Previsico and Descartes tackle corporate flood risk
UK&I • Flood • Sensors
Previsico, specialists in flood forecasting, and Descartes, providers of corporate parametric insurance solutions, have partnered to enhance flood risk management for businesses in the UK and Ireland. This collaboration combines Previsico’s flood forecasting and IoT sensor technologies with Descartes’ parametric insurance offerings, supporting flood warnings and claims settlements. The initiative aims to support businesses in managing and responding to increasing flood risks effectively.
We are discussing the work that Previsico and Descartes are doing on our webinar on 11th February available here and on catch-up.
AXA Climate supports DRC’s climate insurance for farmers
Africa • Agriculture • Climate
Insurer AXA Climate has contributed to the launch of the first climate insurance product in the Democratic Republic of Congo (DRC), designed to protect farmers against climatic shocks such as drought and excessive rainfall. This initiative, under the National Agricultural Development Program (PNDA) and supported by the World Bank and Global Shield Solutions Platform, aims to modernise agriculture and improve livelihoods in Kasaï, Kasaï-Central and Kwilu. The insurance, covering up to 300,000 farmers, utilises satellite data to trigger compensation, supporting resilience and productivity in the agricultural sector.
Generali GC&C and Descartes launch parametric ILS fund
Insurance-linked securities • Catastrophe bond
Generali Global Corporate & Commercial (GC&C) and Descartes Underwriting have launched the Lumyna Twelve Capital Parametric Insurance Linked Securities (ILS) Fund. Managed by Twelve Capital, this fund aims to utilise GC&C’s underwriting capabilities and network, alongside Descartes’ knowledge in risk assessment and parametrics. Lumyna provides infrastructure and marketing support for the fund, which includes cat bonds and securitised natural-perils parametric insurance policies. This initiative focuses on supporting the availability of parametric insurance solutions for natural catastrophe risks.
Global Parametrics and Frontier Markets provide crop insurance
India • Agriculture
Global Parametrics, a risk management firm specialising in parametric solutions, has collaborated with Frontier Markets, a social commerce platform focused on rural India, to offer parametric crop insurance to women smallholder farmers in Rajasthan and Uttar Pradesh. Utilising the Water Balance Index, this insurance programme automatically triggers payouts based on specified criteria, supporting farmers affected by drought without the need for traditional loss assessments. The initiative aims to enhance the resilience of 5,000 farmers, benefiting approximately 24,000 individuals.
Vanuatu receives $1.2 million payout from PCRIC
Pacific • Earthquake
Following the earthquake on 19th December in Port Vila, Vanuatu’s government secured a $1.2 million USD payout from the Pacific Catastrophe Risk Insurance Company (PCRIC). This payment, made under a parametric insurance policy effective from 1st November 2024, was triggered by the number of people impacted. The policy, which covers cyclones, earthquakes and tsunamis, aims to provide funds to manage immediate disaster impacts.
AXA supports WDF’s insured carbon credits initiative
Carbon • Blockchain
Insurer AXA has provided parametric insurance solutions for the Well Done Foundation (WDF), a US-based environmental non-profit that seals disused oil and gas wells. The insurance backs WDF’s “Insured Carbon” programme, which certifies the authenticity and reliability of carbon credits derived from methane sequestration. This programme is designed to enhance confidence among buyers and investors in the voluntary carbon market. Additionally, it incorporates blockchain technology to ensure secure and transparent carbon credit transactions.
Descartes introduces tornado insurance for solar farms
Storm • Energy
Descartes Underwriting has released a parametric insurance product designed to cover utility-scale solar farms in the United States from tornado damage. The coverage, which protects against physical infrastructure damage and business interruption, utilises satellite data and analytics to assess and address the impacts of tornadoes on photovoltaic solar farms with capacities over 10MW. This product calculates payouts based on the extent of damage within the mapped area of the insured solar farm, providing financial relief up to a pre-agreed limit of $70 million USD.
Parameter Climate establishes Bermuda-based transformer
Bermuda • Climate
Parameter Climate, a company specialising in parametric climate and weather risk transfer, has launched a new Bermuda-based entity, Parameter Capital Bermuda Ltd. This entity aims to facilitate broader access to parametric risk deals and syndicate these risks to non-traditional capital sources. The initiative is designed to simplify transactions for a diverse range of investors and expand participation in the growing market for parametric risk investments. Parameter Climate aims to enhance the syndication of climate and weather-related risks beyond the conventional circles of global insurers and reinsurers, potentially increasing market growth and offering expanded risk management solutions to industrial protection buyers.
Tearfund, Global Parametrics, and Humanity Insured initiate drought payout in Malawi
Africa • Drought • Agriculture
Tearfund, a global charity, along with Global Parametrics and Humanity Insured has announced the first drought insurance payout in Malawi, totalling £80,000 GBP and aimed at supporting smallholder farmers. This parametric insurance product, triggered by satellite-monitored soil moisture levels, provides financial aid to farmers facing crop failure risks due to drought. The payout is designed to help 1,200 households by providing drought-tolerant and high-value crops, supporting food security and community resilience against climate-induced challenges.
Future opportunities?
Do you represent an organisation looking for parametric insurance? The Parametric Post reaches parametric specialists across the global (re)insurance market. Contact us out at [email protected] to discuss how we can help you list your requirements.
Please note:
We are not a broker or professional advisor. InsTech, in partnership with ParaRisk (a joint initiative by 20 Twenty Search and Cerchia), makes paid introductions across the parametric insurance market, including brokers, (re)insurers, MGAs and data providers, to help facilitate transactions and grow the market for everyone.
Find out what you’ve missed…
Issue 78 – Risk and resilience in focus
Issue 77 – Parametric by stealth
Issue 76 – Don’t blame the broker
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