Parametric initiatives at COP27 - The Parametric Post Issue 38

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

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The InsTech perspective… parametric initiatives at COP27

Climate • Humanitarian aid • InsTech article

At the COP27 climate summit, while discussions on a ‘loss and damage’ fund (whereby rich countries compensate poor countries for climate damage) made the headlines, progress was also made on another method of supporting vulnerable communities after climate disasters: insurance schemes.

Six key announcements were made at COP27 which establish or expand parametric insurance projects protecting vulnerable communities against climate events. The initiatives focus on resilience to tropical cyclone, drought and flood risks in countries across Africa, the Caribbean, Asia and the Pacific. You can stay up to date by reading our latest article, Parametric initiatives at COP27: what you need to know.

Outside COP27, it has still been a busy two weeks in parametric insurance: read on for the latest news and insights into parametric earthquake, hurricane, flood, hail and travel coverage.

Ensuro: an alternative source of insurance capacity

Blockchain • Crypto • InsTech interview

Ensuro, founded in 2021 and now a licensed reinsurer, is using blockchain technology to provide start-ups and MGAs with a new source of capacity for parametric insurance products. In our interview with Founder and CEO Marco Mirabella, you can learn about the products Ensuro is providing capacity for, its gross written premiums so far and how it conducts pilots with MGAs.

In the news...

CelsiusPro partners with Global Earthquake Model


The Global Earthquake Model Foundation (GEM), a public-private partnership focused on earthquake risk, has partnered with parametric insurance technology company CelsiusPro. The partnership aims to enhance CelsiusPro’s earthquake modelling capabilities and products. GEM data and models will be used in CelsiusPro’s parametric insurance software.

Arbol reinsurance policy triggered by Hurricane Ian

US • Hurricane • InsTech podcast

Arbol, which underwrites parametric reinsurance through its Bermuda-based MGA, has revealed that one of its policies was triggered by Hurricane Ian. The policy covering Florida hurricane risks was developed in April 2022. Instead of using a parametric trigger based on wind speed across a large area, the trigger is based on wind speeds at each property in a notional portfolio. The insurer that had bought reinsurance from Arbol received a pay-out less than three weeks after Hurricane Ian made landfall. To learn more about Arbol, you can listen to our interview with Founder and CEO Sid Jha on InsTech podcast episode 208.

Case studies: hail cover for universities and solar farms

US • Hail

Hailstorms in North America cause over $10 billion USD in property damage annually. Parametric insurance MGA Descartes Underwriting has published an article about hail losses and the effects of climate change on hail. In two case studies, Descartes describes how a solar plant and a university both experienced multi-million-dollar losses from severe hail events in recent years. Each subsequently chose to ‘carve out’ their hail exposure so that it was excluded from their commercial property insurance policy and covered by a parametric policy instead.

Shamba brings satellite data to smart contracts with Chainlink

Agriculture • Blockchain

Shamba, which provides ecological data to blockchain-based smart contracts, is using technology from oracle provider Chainlink to make satellite data available on blockchains. The data from agencies such as the European Space Agency and US National Oceanic and Atmospheric Administration will be used for applications such as parametric crop and livestock insurance. Blockchains cannot connect directly to external data sources, which is why a blockchain oracle service from a provider like Chainlink is required to bridge the gap.

Blink enters Pakistan with Salaam Takaful partnership

Pakistan • Travel

Blink Parametric’s parametric flight disruption product will be embedded across all of insurer Salaam Takaful’s travel insurance policies in Pakistan. Blink provides white-label parametric insurance solutions for insurers and brand partners. You can learn more about Blink by reading our interview with CCO Carl Carter from earlier in 2022.

Aon acquires catastrophe modeller ERN

Caribbean • Latin America

Aon has acquired Mexico-based ERN for an undisclosed amount. ERN is the calculation agent for Súper’s parametric earthquake product in Mexico and the parametric products offered by the Caribbean Catastrophe Risk Insurance Facility (CCRIF) in the Caribbean and Central America. ERN joins Aon’s Reinsurance Solutions business and will work with its Impact Forecasting team.

QBE partners with Save the Children on new investment entity

Humanitarian aid

Children’s charity Save the Children has announced the launch of Save the Children Global Ventures in partnership with insurer QBE. The investment entity aims to deliver humanitarian funding to children globally, and Save the Children has indicated that purchasing parametric insurance is one way it will do so. Other humanitarian organisations such as the World Food Programme, the Danish Red Cross and Start Network have purchased parametric covers to trigger aid financing after catastrophe events.

Hurricane Lisa triggers $175k pay-out for coral reef in Belize

Belize • Hurricane

The Mesoamerican Reef’s parametric hurricane insurance has been triggered after part of the reef was hit by Hurricane Lisa on 2 November. The policy, structured by broker WTW, is underwritten by AXA Climate and Munich Re. The Mesoamerican Reef Fund has received a pay-out of $175,000 USD which will be used for emergency reef restoration.

$2m parametric cover purchased for Hawaii coral reefs

US • Hurricane

WTW has structured a parametric policy covering Hawaii’s coral reefs against hurricane damage. Wind speeds of 57 miles per hour trigger pay-outs of up to $2 million USD. Munich Re is providing insurance capacity. The policy covered part of the 2022 hurricane season and covers the entire 2023 hurricane season.

Drought cover for farmers launched in South Africa

South Africa • Drought • Agriculture

MGA Agnovate, in partnership with agriculture insurance technology company GreenTriangle, has launched a parametric drought insurance product for farmers in South Africa. Pay-outs are triggered by a drop in soil moisture, measured by satellite imagery.

FloodFlash opens US office for North America expansion

US • Flood

UK-based FloodFlash, which offers commercial parametric flood insurance, has announced its launch in North America and the opening of a US office. FloodFlash started underwriting in the US earlier in 2022 and now offers its parametric flood product through brokers in Florida, Virginia, Texas, Louisiana and California.

Zimbabwe farmers receive $124k in pay-outs

Zimbabwe • Drought • Agriculture

31,747 smallholder farmers in northeast Zimbabwe have received parametric pay-outs totalling $123,903 USD from insurer AFC Insurance after droughts resulted in reduced yields. The farmers were covered by an area yield index insurance product designed by technology company Pula. 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.

Blue Marble expands coffee farmers’ index insurance to Kenya

Kenya • Agriculture • Weather

Blue Marble, a technology company which has insured smallholder coffee farmers against excess and lack of rain in Colombia since 2018, will now cover Nespresso farmers in Kenya with its weather index insurance product. In partnership with insurer APA Insurance, the scheme will cover 5,041 farmers.

Two parametric startups in WFP Innovation Accelerator

Humanitarian aid

The World Food Programme (WFP), a humanitarian organisation and part of the United Nations, is running an innovation bootcamp for start-ups specialised in climate change adaptation and resilience. Blue Marble and Etherisc, two of the seven start-ups selected for the programme, specialise in parametric insurance for smallholder farmers.

Find out what you've missed...

Issue 37 – Parametric triggers for governments’ disaster risk financing

Issue 36 – Climate change impact on parametric portfolios

Issue 35 – Parametric protection at the point of worry


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