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The InsTech perspective… experience of loss driving parametric insurance innovation
“We ended up waiting over 324 days to hear back from a claims adjuster… unfortunately there were a lot of exclusions from the policy and we didn’t get any claims payment at all.” - Jonathan Gonzalez on InsTech podcast episode 183
Jonathan Gonzalez explains on this week’s InsTech podcast how his personal experience of the claims process after Hurricane Maria in 2017 led him to found Raincoat, which supports the development, distribution and policy administration of parametric insurance products.
There are several cases of insurance innovation being driven by experiences of severe loss. Insurance industry losses from events such as Hurricane Andrew in the 1990s led to the creation of the catastrophe bond market. Some catastrophe bonds have used parametric triggers since 1997. One example is the New York Metropolitan Transportation Authority’s storm surge bond, which it purchased in 2013 after experiencing heavy and uninsured losses from 2012’s Hurricane Sandy.
According to Swiss Re, 2021 saw $147 billion of uninsured catastrophe losses, more than half the total economic loss from catastrophes. As the frequency and severity of extreme weather events increase, innovation in insurance continues to be needed. The ideas that could transform coverage options in the future may be inspired by experiences of loss in the present.
You can listen to our podcast discussion with Raincoat’s Jonathan Gonzalez on the InsTech website or your podcast channel of choice to learn more about what Raincoat offers, the initiatives it is working on and its views on parametric insurance regulation.
Travel • InsTech interview
Carl Carter, UK Country CEO at CPP Group and Chief Commercial Officer of Blink Parametric, explains how CPP and Blink’s parametric travel solutions are helping brands differentiate themselves. He also discusses other parametric solutions Blink is working on, including home energy and weather.
In the news...
Travel • Weather • Energy
Blink Parametric has partnered with Lloyd’s (re)insurance broker MNK Re. MNK Re will support the rollout of Blink’s parametric travel insurance solutions and work with Blink on distributing new parametric products including Blink Climate, which protects policyholders against adverse weather, and Blink Energy which insures energy consumption.
Mexico • Agriculture • Weather
The government of Mexico has announced a project to develop parametric insurance for smallholder farmers in Mexico, funded by members of the Insurance Development Forum (IDF) and the InsuResilience Solutions Fund. The public-private partnership involves Raincoat as a technology partner, state-owned (re)insurer Agroasemex and IDF members AXA, Guy Carpenter, Munich Re and Swiss Re. The project forms part of a 2019 agreement between the German government, IDF and the United Nations Development Programme to support risk financing in 20 countries by 2025.
Agriculture • Rainfall • Blockchain
US-based insurer Lemonade, founded in 2015, has launched through its nonprofit arm the Lemonade Foundation a ‘Crypto Climate Coalition’. The partnership includes reinsurer Hannover Re, blockchain oracle provider Chainlink, index insurance structurer Pula, decentralised insurance platform Etherisc and weather data provider Tomorrow.io alongside blockchain companies Avalanche and DAOstack. The companies plan to design and launch a parametric insurance product protecting smallholder farmers against lack of or excess rain using blockchain technology. In our recent interview, Chainlink’s William Herkelrath explains how he believes blockchain can enable crop microinsurance in emerging markets.
Japan • Earthquake • Catastrophe bond
White Rock Insurance, managed by Aon, has issued a catastrophe bond for $16.2 million for an unknown sponsor. The bond will provide coverage against losses from earthquakes in Japan, and is believed to use a parametric trigger, as it seems to be a renewal of a parametric bond with the same coverage issued in March 2021.
UK • Law • Blockchain
LawtechUK, a government-backed legal technology initiative in the UK, uses parametric insurance as a case study in its report about smart legal contracts. Smart legal contracts are legally binding contracts that are executed by code and may use blockchain technology. LawtechUK writes that smart legal contracts can “automate the performance of [a parametric] policy”.
We’re continuing work on the upcoming InsTech report, "Parametric Insurance - the 100+ companies to watch". If your company is not an InsTech corporate member, or we are not already talking to you, you may be missed out. To make sure your company is included, or to discuss opportunities for expanded coverage, contact Henry Gale on LinkedIn or email email@example.com. We’re also interested in speaking with risk managers or other commercial buyers of parametric insurance to hear their views on the topic.
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