The Parametric Post, the only newsletter dedicated to parametric insurance.
The InsTech perspective… parametric solutions for non-damage business interruption
Supply chain pressures, the COVID-19 pandemic and a climate-induced increase in weather variability have disrupted businesses around the world in recent years. Organisations are increasingly worried about ‘non-damage business interruption’ (NDBI) losses not covered by traditional insurance. Dozens of events in recent years have caused more than $1 billion USD in NDBI losses, from natural catastrophes to infrastructure failures.
Not all NDBI events are insurable, but parametric insurance is increasingly enabling coverage for risks that were previously difficult or impossible to insure. In this week’s Parametric Post, parametric insurance covers businesses for air freight delays in Latin America, floods in the UK and cyclones in the Pacific. In all those cases, businesses can be hit by revenue drops or cost spikes even if they suffer no physical damage to property.
InsTech’s latest report, ‘Intact but interrupted: parametric solutions for non-damage business interruption risks’, examines the range of parametric solutions available for NDBI risks. We cover products that are quickly becoming established after increased adoption in the last 3-5 years and new solutions we see as promising. You can download the report for free here.
How sensors are closing coverage gaps in earthquake insurance
Earthquake • InsTech event
Last week, InsTech’s Matthew Grant hosted Safehub’s Andy Thompson, Liberty Mutual Re’s Jean-Christophe Garaix and XS Global’s Alejandro Solorzano for one of our most popular events. We discussed earthquake protection gaps and parametric solutions. Safehub is working with Liberty Mutual Re and XS Global to offer parametric earthquake insurance with pay-outs triggered by sensor readings at a building level. If you missed it, you can watch back the webinar on our BrightTALK channel.
Latest parametric opportunities
We know organisations seeking:
- $50 million of insurance for wind speeds in Florida and the Gulf of Mexico, Mar-Dec 2024
- $100 million of insurance for Philippines typhoon, Apr-Dec 2024
- $10 million industry loss warranty for cyber catastrophes (PCS index) in excess of $2 billion, Apr-Dec 2024
Can you offer coverage to any of these organisations? Email [email protected] and we may be able to introduce you to them.
We are not a broker. 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.
Do you represent an organisation looking for parametric insurance but struggling to find insurance capacity? The Parametric Post reaches parametric specialists across the global (re)insurance market. Reach out at [email protected] to talk about listing your need.
In the news…
Swiss Re and Britam pay out $88,000 after Kenya floods
Kenya • Flood
Insurer Britam, reinsurer Swiss Re and aid agency Oxfam launched a parametric flood scheme in 2023 to protect vulnerable communities in Kenya. Heavy rains in November have triggered pay-outs to affected households totalling 14 million KES ($88,000 USD).
Blink Parametric partnerships expand travel disruption cover
Canada • Europe • Travel
More insurers have adopted Blink Parametric’s technology for parametric travel coverage. Blink Parametric has launched a product with Baloise in Switzerland, extended its work with Canada’s Blue Cross and expanded its partnership with MAWDY, part of MAPFRE, in Ireland. These partnerships enable travel insurance policyholders to access parametric flight disruption or lost luggage coverage. Travellers are compensated in real time if their flights are delayed or cancelled or their luggage is lost.
Otonomi to offer parametric freight insurance online in Peru
Peru • US • Supply chain
Otonomi, an MGA which offers parametric coverage for freight delays, will distribute its product through online shipping insurance platform Zuru LatAm. The partnership covers freight travelling between the US and Peru.
Beazley-backed MGA pays first parametric tornado claims
US • Beazley
Sola, which launched its parametric tornado insurance product for homeowners in 2023, has paid its first claims after tornadoes hit Tennessee in December. Sola is backed by capacity from Beazley, with Costero Brokers responsible for securing the capacity. While other companies offer commercial parametric tornado insurance, these are the first examples we know about of parametric pay-outs to homeowners after a tornado. Sola participated in cohort nine of the Lloyd’s Lab Accelerator programme.
Swiss Re acquires flood modeller Fathom
UK • Flood
Swiss Re has acquired UK-based flood modelling firm Fathom. Fathom already works with companies in the parametric insurance market on modelling and monitoring flood risks. Swiss Re Reinsurance Solutions says it will be able to expand and refine its offerings to clients with the acquisition.
Parametric cyclone coverage launched in Samoa
Samoa • Cyclone
Insurer Tower has expanded its parametric cyclone insurance product, currently available to households in Fiji and Tonga, to Samoa. Available coverage limits range from $1,000 to $10,000 WST ($370 to $3,700 USD). Tower offers its parametric insurance product using technology from CelsiusPro.
NormanMax gains approval in principle for parametric syndicate
UK
Start-up NormanMax Holdings has received ‘approval in principle’ to launch a Lloyd’s syndicate specialised in natural catastrophe parametric (re)insurance. NormanMax Syndicate 3939 aims to start underwriting in April 2024 and distribute its products globally. Apollo will manage the syndicate. NormanMax’s team comes from parametric MGA New Paradigm Underwriters.
Hurricane Tammy triggers $1.5m pay-out to St. Kitts and Nevis
St. Kitts and Nevis • Hurricane
The Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC), which provides parametric catastrophe coverage to governments and public utilities in the Caribbean and Central America, has made a pay-out following Hurricane Tammy. Tammy caused heavy rains when passing St. Kitts and Nevis, triggering a pay-out to the government of $1.5 million USD.
UK storms trigger FloodFlash policies
UK • Flood
Parametric flood MGA FloodFlash has paid claims following the UK’s storm Gerrit in late December and storm Henk in early January. FloodFlash says its sensors have measured flood depths over 2 metres at some properties. The sports, leisure and hospitality industries have been worst affected.
WFP insures 5,000 farmers in Côte d’Ivoire pilot
Côte d’Ivoire • Agriculture • Humanitarian aid
The United Nations World Food Programme has purchased parametric insurance against droughts and excess rainfall for over 5,000 rice farmers in Côte d’Ivoire. The insurance is backed by a public-private partnership including the African Risk Capacity, AXA Climate, Allianz Re and others.
AXA Climate covers Mexico mangrove forest against hurricanes
Mexico • Hurricane • Carbon
AXA Climate, AXA Mexico and environmental consulting firm ClimateSeed have created a parametric policy to protect the mangrove forests of San Crisanto, Mexico, and its community of fishermen. The policy will provide pay-outs of up to $100,000 USD based on hurricane wind strength and proximity. Pay-outs will be used to restore the mangroves and related infrastructure.
Allianz Hungary launches parametric flight disruption cover
Hungary • Travel
Allianz Hungary will sell parametric flight disruption cover, designed with technology company InsurWiz, through online ticketing portal Repjegy.hu. Policyholders will receive compensation if their flight is delayed by more than 3 hours.
Find out what you’ve missed…
Issue 62 – How parametric is filling wildfire protection gaps
Issue 61 – Why the parametric insurance market grew in 2023
Issue 60 – Why parametric insurance suits shock events
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