The Parametric Post, the only newsletter dedicated to parametric insurance.
Thought for the day… lessons for financially sophisticated regions
Recent heavy rain and flooding in the United Arab Emirates (UAE) is a reminder of the need for robust risk mitigation measures, even for areas of the world where certain catastrophic events are not considered major threats.
In 2023, flooding was the second-largest driver of insured losses across the world. Dubai faced its heaviest rainfall on record on April 16th. Evaluating the cost of the damage inflicted by the flood upon homes, commercial buildings, transportation networks and critical infrastructure will take time. Many of the losses will not be covered by existing indemnity insurance. As well as infrastructure damage, the city will face hundreds of millions of dollars in business interruption caused by the flood and subsequent airport closure.
Insurers and governments will be carefully watching recent examples of flood-based business interruption insurance, such as that implemented in the United States for the 2024 Atlantic Hurricane season, and the recent introduction of parametric reinsurance coverage for risks in and around Istanbul, Turkey. Governments could play a pivotal role by mandating parametric insurance coverage against climate change perils, thereby ensuring comprehensive protection for all stakeholders.
Studies indicate that the Arabian Peninsula may experience a 30% increase in annual precipitation, suggesting floods like the one witnessed in the UAE may become more frequent. Join us for our webinar as we explore the latest technological advancements, including the use of artificial intelligence, to gain a better understanding of flood risk within the insurance industry.
This week’s parametric opportunities
Are you an insurer, MGA or broker with capacity to deploy for parametric insurance?
We know organisations seeking:
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$20 million of crop insurance in India, May-Dec 2024
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$100 million of insurance for Philippines typhoon, Apr-Dec 2024
Can you offer coverage to any of these organisations? Email [email protected] to learn more.
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.
In the news…
Global Parametrics launches extreme heat insurance programme in India
India • Temperature
Global Parametrics and Mahila Housing Trust, with support from the Natural Disaster Fund (NDF), have launched a climate risk insurance program covering 26,000 women in Gujarat’s industrial cities. The index-based parametric insurance protects women in the sector against income loss from extreme heatwaves which can affect their homes and productivity. This solution taps into NDF’s risk capacity and collaborates with Howden and Go Digit Insurance to offer a solution for urban heat resilience.
Arbol secures $60m in Series B funding
Climate • Agriculture • Energy
Arbol has raised $60 million USD in a Series B funding round led by Giant Ventures and Opera Tech Ventures to address climate risk management. The funds will expand Arbol’s parametric insurance offerings, which provide data-driven payouts based on predefined climate data triggers. The investment supports expansion into markets like agriculture and renewable energy, focusing on underserved communities.
Howden acquires parametric insurance specialist MiCRO
Latin America • Weather
Howden has acquired MiCRO, a microinsurance specialist focused on developing parametric insurance solutions for underserved populations in Latin America, particularly against natural catastrophes. MiCRO, initially established after the 2010 Haiti Earthquake, operates in several Latin American countries and seeks to expand its parametric offerings with Howden’s support. The acquisition aligns with Howden’s commitment to leveraging insurance to promote resilience, particularly in emerging markets facing increased climate-driven risks.
Swiss Re: Climate change increases demand for parametric solutions
Climate
Swiss Re highlights the growing uptake of parametric insurance as climate change intensifies natural catastrophe risks. Parametric solutions, offering quick payouts, can bridge the natural catastrophe protection gap exacerbated by factors such as increasing hurricanes and rising sea levels further magnifying storm surges, as seen with Hurricane Sandy.
NormanMax launches parametric Syndicate 3939 at Lloyd’s
Climate • Earthquake
NormanMax Insurance Holdings has launched Syndicate 3939 at Lloyd’s in collaboration with Apollo Syndicate Management Ltd. Syndicate 3939 will focus on providing parametric insurance and reinsurance products for natural catastrophes such as hurricanes, tropical cyclones, typhoons and earthquakes. NormanMax aims to harness data and technology to create parametric solutions addressing the natural disaster protection gap amidst increased climate risk and volatility.
Plover Parametrics launches specialty brokerage for climate risks
Climate • Flood
Plover Parametrics has launched a specialty brokerage aimed at supporting brokers with climate and emerging risk solutions. The company secured over $5 million USD in venture capital funding to expand its brokerage team and automate its broking process. The initiative addresses the high demand for excess and surplus products due to market withdrawals in flood, storm and fire-prone areas.
Marsh launches Global Alternative Risk Solutions practice
ILS
Marsh has launched a Global Alternative Risk Solutions practice which consolidates its parametric solutions, alternative risk transfer and complex risk operations. The practice aims to develop risk transfer products and help clients access insurance-linked securities (ILS) capital with support from Guy Carpenter.
Africa Specialty Risks launches syndicate at Lloyd’s
Africa
Africa Specialty Risks (ASR) has launched Syndicate 2454, the first African-focused syndicate at Lloyd’s, managed by Apollo. Beginning underwriting with a planned gross premium of £70 million GBP, the syndicate covers political risk, parametric and other lines. It aims to bring African business to the London Market, leveraging ASR’s network and Lloyd’s brand to fill the corporate and specialty capacity gap in Africa.
Arch launches parametric event insurance product
UK
Arch Insurance International has introduced a regional events insurance solution for UK-based clients through its Arch IQ platform. The insurance offers traditional indemnity and an agreed-value parametric option for event cancellation. Coverage includes conferences, music events and sports, with extensions for further risks such as terrorism and national mourning.
FloodFlash introduces Dealer programme for auto businesses
US • Flood • Business interruption
FloodFlash has launched a Dealer programme targeting vehicle sales and rental businesses in high flood risk areas in the US. The programme offers sensor-enabled parametric flood insurance, addressing coverage gaps for dealers with inventories vulnerable to flooding. Features include payment claims, stock damage, business interruption coverage and smart sensors to align parametric measures with actual losses. Limits are up to $2 million per location, with higher limits subject to approval, aiming to protect dealerships that have struggled to secure sufficient flood coverage in the past.
Mexico secures $175m Pacific storm cat bond
Mexico • Catastrophe bond
Mexico has secured $175 million USD of parametric disaster insurance for Pacific named storms through the International Bank for Reconstruction and Development (IBRD) CAR Mexico 2024 catastrophe bond issuance, increasing its overall cat bond coverage to $595 million USD. This follows the $420 million USD already secured for earthquakes and Atlantic hurricanes. The tranche offers parametric protection triggered by storm parameters, valid until April 2028. Munich Re will facilitate the arrangement, passing reinsurance protection to Mexico’s government insurer, AGROASAMEX.
El Niño drives $60m payout to Southern African nations
Africa • Drought • Payments
The African Union’s climate insurance agency, African Risk Capacity, will disburse at least $60 million USD to Malawi, Zambia, Zimbabwe and Mozambique to mitigate the effects of an El Niño-driven drought. Payments are due at the end of the harvesting season. The drought has reduced corn production, with Zimbabwe’s crop dropping by three-fifths. The payouts, based on the countries’ insurance premiums and a parametric model triggered by rainfall metrics, aim to alleviate food insecurity and support government initiatives in mobilising additional resources.
USDA expands rainfall index insurance to Hawaii
US • Rainfall • Agriculture
Beginning in 2025, the US Department of Agriculture (USDA) will extend its Pasture, Rangeland and Forage (PRF) rainfall index insurance to Hawaii, offering coverage to livestock producers on the Big Island for grazing acres. This initiative, part of the USDA’s Risk Management Agency (RMA) efforts, uses a rainfall index based on Hawaii Climate Data Portal information. The expansion aligns with a broader initiative to improve insurance options for Hawaii’s agricultural sector.
Heat index-based cattle insurance for Kerala dairy farmers
India • Temperature
The Ernakulam Regional Cooperative Milk Producers’ Union (ERCMPU) has introduced a heat index-based cattle insurance scheme for dairy farmers in Kerala, India. Covering April and May, the scheme insured around 25,000 animals, benefiting approximately 10,000 farmers across Thrissur, Ernakulam, Kottayam and Idukki districts. The insurance aims to mitigate the impact that rising temperatures have on animal health and milk production.
K2 Parametric Insurance Services expands capacity with Palms Specialty
US • Earthquake • Hurricane
K2 Parametric Insurance Services has partnered with Palms Specialty to expand capacity for US earthquake and hurricane parametric policies. This collaboration aims to allow K2 Parametric to better meet clients’ needs for commercial natural catastrophe coverage.
PCRIC & WTW develop parametric solution for submarine cable network
Pacific • Earthquake
The Pacific Catastrophe Risk Insurance Company (PCRIC) and broker WTW have developed a parametric trigger insurance policy for PNG Data Co., an operator of a submarine fibre optic cable network in Papua New Guinea. The policy offers payouts following earthquakes that may damage the undersea cable network, providing financial protection when traditional coverage options are unavailable.
Find out what you’ve missed…
Issue 69 – Expansion of sensor-driven parametric earthquake (re)insurance
Issue 68 – Parametric travel insurance goes global
Issue 67 – Diversification opportunities for parametric insurers
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