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We are delighted to release our new report, “Parametric Insurance in 2022: the 150+ companies to watch”. We believe it is the most comprehensive report into the parametric insurance market available anywhere, with an overview of parametric insurance trends, what has changed since our previous report in 2020 and details of more than 150 companies providing parametric insurance solutions. You can download a preview of the report on InsTech’s website. The report is free to InsTech corporate members, who can log in to download a copy. Everyone else can purchase the report for £500.
The InsTech perspective… growth of parametric insurance in Africa
An estimated 490 million people (40% of the population) in the African continent were living in extreme poverty in 2021 according to the United Nations (UN). More than 60% of the population of sub-Saharan Africa are smallholder farmers according to McKinsey. Consequently, the populations of many African countries have low resilience to catastrophes and extreme weather. Events such as droughts, floods and cyclones can cause humanitarian disasters.
Several parametric risk transfer programmes are in place to provide fast pay-outs to governments, humanitarian agencies and communities following extreme weather events in Africa. The UN Secretary-General António Guterres has urged countries to “scale up catastrophe-triggered financial instruments”, highlighting the African Risk Capacity as an example. In our recent online parametric panel discussion, which is available to watch on demand, Swiss Re’s Martin Hotz cited “successful claims examples” as a key factor in the growing adoption of parametric insurance globally.
In this week’s issue, we discuss pay-outs triggered in Malawi, Zambia and Nigeria, as well as new funding and partnerships announced for parametric programmes in Malawi, Ghana and Namibia. As parametric pay-outs are triggered to support vulnerable communities, more African governments and organisations will consider using parametric insurance to increase their resilience. Contact us if you would like to know more about companies offering services in this area.
In the news...
Weather • InsTech event
Arbol’s Co-founder and CFO Philippe Heilberg says Arbol will transact more business in the first half of 2022 than during the whole of 2021. Arbol provides parametric climate and weather risk management solutions for multiple sectors. The company previously reported that it transacted $70 million USD in gross written premiums in 2021. If you are in London on 28 June, you can hear more about Arbol and meet Co-founder and CEO Sid Jha at InsTech’s next evening event.
The Oasis Loss Modelling Framework, a not-for-profit providing tools and standards for risk modelling, has launched IDF Oasis Risk Explorer, a risk modelling tool funded by the Insurance Development Forum. The tool is intended to be an entry point for non-specialists interested in disaster risk financing, focused on parametric risk transfer. It currently models tropical cyclone risk but intends to cover more perils by November 2022.
France • Australia • Hail
AXA Climate, part of the AXA Group specialising in parametric insurance, will launch its parametric hail product in France and Australia using Hailios’ hail sensors. AXA Climate currently offers parametric hail coverage in the US. On InsTech podcast episode 192, AXA Climate’s Mia Vioulès and CoreLogic’s Robert Schablik explain how hail sensors are being used to trigger parametric policies.
Weather • Satellite
BirdsEyeView, an MGA providing parametric weather and catastrophe insurance to small and medium-sized businesses, has raised an undisclosed amount of seed funding. The round was led by SFC Capital and was matched by the European Space Agency.
Malawi • Zambia • Drought
The African Risk Capacity (ARC), a multi-country risk pool, will pay claims to the governments of two African countries after droughts triggered their parametric insurance policies. Malawi will receive a pay-out of at least $14.2 million USD and Zambia has been paid a claim of $5.3 million USD. Malawi’s pay-out will be disbursed to the UN World Food Programme in Malawi to support vulnerable households.
Malawi • Drought
The Africa Disaster Risk Financing programme (ADRiFi) promotes ARC by helping governments pay for coverage. ADRiFi had subsidised the government of Zambia’s ARC premiums with grants from the Swiss Agency for Development and Cooperation and the African Development Bank. Following the recent pay-out to Malawi above, ADRiFi has now been extended to Malawi. It is providing grants worth $9.25 million USD to help the country pay its ARC premiums and develop climate risk management solutions.
Ghana • Flood
A public-private partnership has been launched to create a parametric flood insurance scheme for the government of Ghana. The initiative involves the Ghana Ministry of Finance, the UN Development Programme, the German Government and the Insurance Development Forum (IDF), led by IDF members Allianz and Swiss Re. ICEYE is providing its building-level flood depth data. The insurance scheme is designed to support the Ghanaian National Disaster Management Organisation and local authorities after severe urban flooding.
Nigeria • Agriculture • Weather
Development organisation Heifer International has announced that more than ₦111 million NGN ($265,000 USD) has been paid to 3,110 rice farmers in Nigeria after their area yield index insurance was triggered. Heifer International launched the area yield index insurance product for smallholder farmers in 2021 in partnership with insurer Leadway, agribusiness company Olam and Pula, which designs index insurance products. Area yield index insurance protects farmers against reduced crop yield by measuring a geographical area’s average yield for a season against previous seasons. Pay-outs are triggered if the reduction in yield exceeds a predefined threshold.
Namibia • Agriculture • Weather
The government of Namibia is looking to create an index insurance product for smallholder farmers in the country. The World Bank is advising the Namibia Financial Institutions Supervisory Authority on the design and implementation of the product.
UK • Carbon
UK-based Kita, founded in 2021, has raised £350,000 GBP in a pre-seed funding round led by Insurtech Gateway. Kita is designing parametric insurance products for voluntary carbon markets. It is currently participating in the eighth cohort of the Lloyd’s Lab innovation programme.
US • Business interruption
Broker WTW and risk analytics company One Concern have announced they are working together to improve dependency risk management and increase adoption of parametric insurance. Dependency risks relate to the infrastructure a business relies on, such as transport links and the power grid. One Concern is providing a dependency risk resilience score to help WTW’s US clients understand these risks and structure parametric solutions to cover them.
UK • US • Flood
FloodFlash, an MGA using sensors to provide parametric flood insurance to businesses in the UK and US, has added a new tool for brokers to its quote portal. Previously brokers had to input chosen depths at which pay-outs would be triggered and what pay-out would correspond to what depth. Now FloodFlash automatically suggests what trigger depths and pay-outs a client should use based on information about the property submitted by brokers.
Pacific • Cyclone • Earthquake
The Pacific Catastrophe Risk Insurance Company (PCRIC), a multi-country risk pool, has announced it received €10 million EUR from the German government through the World Bank. PCRIC provides parametric cyclone and earthquake coverage to Pacific Island Countries. The funding will be used to subsidise countries’ premium payments.
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