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What’s holding parametric insurance back? – The Parametric Post Issue 18

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

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The InsTech perspective… what’s holding parametric insurance back?

This week’s issue features encouraging examples of companies in parametric insurance raising funds and expanding into new areas. Success in parametric insurance is not easy and this week we are asking a question: what’s holding parametric insurance back? We have released a LinkedIn poll to understand what our parametric community thinks is the biggest obstacle to the wider uptake of parametric insurance. We’ve given four options – regulatory issues, lack of awareness, cost and basis risk. Please choose your answer here. We’ll be discussing the results in a future Parametric Post.

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Climate • InsTech newsletter

Understanding climate-related events is a top priority for insurers and a focus area of parametric insurance innovation. You can sign up to InsTech London’s new Climate Risk newsletter now to receive monthly updates on climate events, tools and models.

In the news…

Parsyl raises $25m and expands business

Supply chain • Temperature • InsTech podcast

Parsyl’s $25 million Series B funding round has been led by Hudson Structured Capital Management. Parsyl is a supply chain risk management scale-up that uses temperature sensors to offer parametric insurance for perishable cargo including medicines such as vaccines. It operates as a coverholder at Lloyd’s and owns Lloyd’s Syndicate 1796. With the funding round, Parsyl is launching an MGA in the US and says it will expand the scope of its Lloyd’s syndicate.

Parsyl has also announced a partnership with the Africa Centres for Disease Control and Prevention. The partnership is intended to support the rollout of COVID-19 vaccinations by making 10,000 vaccine monitoring devices available to countries in the African Union. CEO and Co-founder Ben Hubbard explained how Parsyl’s parametric insurance product ColdCover protects vaccines and other temperature-sensitive cargo on InsTech podcast episode 123.

Descartes Underwriting raises $120m

Climate • InsTech podcast

Parametric insurance MGA Descartes Underwriting has announced $120 million in Series B funding, led by growth equity firm Highland Europe. Descartes will use the funding to grow its technology platform, expand into new lines of business and target larger deals globally. The company had raised $18.5 million in its Series A round in September 2020. Sébastien Piguet, Co-founder and Head of Underwriting at Descartes, discussed how parametric insurance can help manage climate risks on InsTech podcast episode 165.

Reask raises seed funding

Australia • Climate • InsTech podcast

Australia-based Reask, a natural hazard modelling company founded in 2018, has closed a seed funding round led by technology company Tencent. Swiss Re uses Reask’s calculation agent model Metryc for parametric tropical cyclone insurance policies, and Reask’s clients also include Global Parametrics, AXA and Canopius. The undisclosed amount of funding will be used to expand Reask’s science and AI team and enhance the company’s sales, marketing and operations. Co-founders Thomas Loridan and Nick Hassam explained how they help insurers understand climate change on InsTech podcast episode 127.

Chainlink powers parametric flight delay protection

Travel • Blockchain • Crypto

Decentralised insurance platform Etherisc has launched FlightDelay, which offers automatic payouts to policyholders whose flights are delayed or cancelled. Policies use blockchain technology connected to flight data sources by oracle provider Chainlink. Currently, policies can only be purchased using the USDC cryptocurrency (a stablecoin tied to the US dollar), with other crypto and non-crypto payment options planned. FlightDelay is available globally for passenger flights. You can learn more about Etherisc and decentralised insurance business models in InsTech’s report, Demystifying Crypto: the insurance opportunities and challenges, which is currently free to download.

MIC Global set to launch Lloyd’s syndicate

UK • InsTech interview

Start-up insurer MIC Global (formerly Micro Insurance Company) has received in-principle approval to launch a Lloyd’s syndicate. Syndicate 5183 is part of the syndicate-in-a-box initiative, which adjusts the entry criteria for syndicates to make it easier to bring new innovative syndicates into the Lloyd’s market. The syndicate will start operations on 1 April 2022 and will be run by managing agent Asta. MIC Global’s Founder and CEO Harry Croydon spoke to us last month about the “parametric-like” microinsurance products the company provides to individuals and small businesses.

Typhoon Rai triggers $52.5m cat bond pay-out to the Philippines

Philippines • Typhoon • Catastrophe bond

The Philippines’ parametric catastrophe bond, issued by the World Bank, will pay out at least $52.5 million after being triggered by Typhoon Rai. The bond is structured to pay out in increments of 35%, 70% or 100% of the $150 million tropical cyclone coverage. Calculation agent AIR Worldwide determined that the wind parameters breached the bond’s trigger for 35% pay-out. Artemis reports that precipitation from the typhoon is yet to be taken into account, which could increase the pay-out. In the previous issue of the Parametric Post, we reported on three other parametric insurance initiatives triggered by Typhoon Rai in the Philippines.

Ensuro becomes licensed reinsurer

Blockchain • Crypto • InsTech podcast

Start-up Ensuro, which uses cryptocurrency from investors as an alternative form of capital for parametric insurance, has received an Insurance General Business licence from the Bermuda Monetary Authority. Ensuro is providing capacity for OTONOMI, an MGA underwriting parametric supply chain insurance. This licence, effective 1 January 2022, makes the company the first reinsurer authorised to underwrite insurance risk using cryptocurrency as capital, according to Ensuro. We interviewed Founder and CEO Marco Mirabella on InsTech podcast episode 164.

Area yield index insurance pays out to Kenyan farmers

Kenya • Agriculture • Weather

13,523 farmers in Kenya have received a combined pay-out of $750,000 from an area yield insurance scheme in Kenya led by start-up Pula and insurer APA Insurance. The pay-out was triggered by reduced local crop yield caused by drought between March and May 2021. The index insurance programme is supported by the government of Kenya and the European Union.

Find out what you’ve missed…

Issue 17 – Parametric pay-outs from Typhoon Rai

Issue 16 – How we spot parametric insurance trends

Issue 15 – Replacing indemnity insurance with parametric


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