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parametric-post-issue-19-featured

The flood protection gap and parametric insurance – The Parametric Post Issue 19

The Parametric Post, the only newsletter dedicated to parametric insurance.

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The InsTech perspective… the flood protection gap and parametric insurance

Flood • InsTech article

Flooding caused $105 billion of economic loss in 2021 according to Aon, more than any other peril. Only $22 billion was insured, leaving a protection gap (the difference between economic and insured losses) of $93 billion. As climate change causes flood risk to increase, parametric insurance has a role to play in helping communities and businesses affected by flood events.

In this week’s Parametric Post, Tokio Marine uses ICEYE’s flood data to develop parametric products, FloodFlash plans to sell its commercial parametric flood insurance internationally, a parametric flood insurance pilot is announced for New York City in June and a multi-country parametric risk pool focused on flood resilience adds another member.

To learn more about flood risk and the data and models that are helping insurers address the protection gap, you can read our articles from 2021, Building flood resilience in the UK and To manage is to measure: observations on the recent European floods.

Four challenges facing parametric insurance

InsTech article

In the last Parametric Post, we asked the parametric community what it thought the biggest obstacle was to the wider uptake of parametric insurance. More than half of you voted for lack of education or awareness. You can now read our analysis of the poll results and the challenges still facing parametric insurance, including perspectives from Siddhartha Jha, Founder and CEO of Arbol.

In the news…

Blink Parametric partners with Zurich Canada

Canada • Travel 

Blink Parametric (part of CPP Group), which provides white-label parametric insurance products, has partnered with insurer Zurich to provide flight disruption coverage. Travel insurance policyholders with Zurich Canada whose flights are delayed or cancelled will be notified automatically and offered compensation through Blink’s platform.

ICEYE raises $136m in Series D funding

Flood

ICEYE, which provides building-level flood depth data to insurers, has raised $136 million in Series D funding, led by Seraphim Space. ICEYE’s data is used as a trigger for Descartes Underwriting and AXA Climate’s parametric flood insurance policies. Insurer Tokio Marine took part in the funding round and will use its partnership with ICEYE to support the development of parametric insurance products. ICEYE will use the funding to develop new natural catastrophe solutions including wildfire, wind and earthquake data.

New Zealand earthquake cover expanded to larger businesses

New Zealand • Earthquake • InsTech article

MGA Bounce Insurance, which launched its parametric earthquake insurance product to individuals and small businesses in New Zealand in 2021, is now offering a commercial parametric earthquake insurance product for larger businesses. Bounce’s existing policies have limits of up to NZ$50,000 (US$33,000) for small businesses and the new product can provide limits of up to NZ$2 million (US$1.3 million). It will only be available through brokers. Insurance capacity is provided by Munich Re Innovation Syndicate 1840 at Lloyd’s. We wrote about Bounce last year when it launched its first product.

Vietnam joins Southeast Asia disaster risk pool

Vietnam • Flood 

Vietnam has become the eighth member of the Southeast Asia Disaster Risk Insurance Facility (SEADRIF), a multi-country risk pool established in 2018. Vietnam has a coastline of over 3,200km and is vulnerable to tropical cyclones, floods and droughts. SEADRIF offers a partially parametric flood insurance product to governments. Pay-outs are triggered based on the estimated number of people living in areas where flood depth exceeds 25cm, but there is also an indemnity-based component offering protection against floods which do not trigger parametric pay-outs. Lao PDR is the only country currently using the product and discussions are ongoing with other countries. SEADRIF’s other members are Cambodia, Indonesia, Myanmar, the Philippines, Singapore and Japan.

FloodFlash raises $15m Series A funding

UK • Flood

FloodFlash, an MGA offering parametric flood insurance to UK businesses, has raised $15 million in Series A funding, led by Buoyant Ventures. FloodFlash plans to use the investment to expand internationally and offer its product in the US, Germany, Australia, and Japan.

Caribbean weather microinsurance to be sold more widely

Caribbean • Weather 

The Caribbean Catastrophe Risk Insurance Facility (CCRIF) has partnered with Caribbean insurer Guardian General Insurance Limited to increase the availability of microinsurance in the region. The Livelihood Protection Policy, a parametric microinsurance product protecting low-income individuals against heavy rainfall and high winds, was developed through the Climate Risk Adaptation and Insurance in the Caribbean (CRAIC) Project run by CCRIF and its partners.

New York parametric flood insurance pilot planned for June

US • Flood 

The inclusive insurance project for New York City, which featured in Parametric Post issue 11, has announced its parametric flood insurance pilot will take place in a small area of New York City in June 2022. The findings of the pilot will be used “to prove to lawmakers and insurance companies that parametric insurance works and should be deployed at a greater scale” in New York City. The project is run by the Wharton Risk Center, the Center for New York City Neighborhoods and the New York City Mayor’s Office of Climate Resilience in partnership with Global Parametrics and Guy Carpenter.

Agricultural insurance launched for farmers in Guatemala

Guatemala • Weather • Agricultural

Guatemala’s Ministry of Agriculture has launched index-based agricultural insurance to protect smallholder farmers against heavy rain and prolonged droughts. The product was designed by the Microinsurance Catastrophe Risk Organisation (MiCRO). At its launch, the product will provide coverage for 6,000 farmers, with a goal of reaching 40,000 during 2022.

Insuring art against extreme weather events

Fine art • InsTech interview 

Insurance lawyer Catrin Povey at Capital Law writes about how climate change is affecting the fine art insurance market and discusses the option of parametric insurance. To learn more about Capital Law’s perspective on parametric, you can read our interview with partner Rachel Hillier.

Find out what you’ve missed…

Issue 18 – What’s holding parametric insurance back?

Issue 17 – Parametric pay-outs from Typhoon Rai

Issue 16 – How we spot parametric insurance trends

 

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