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The InsTech perspective… parametric protection at the point of worry
Mexico • Earthquake • InsTech podcast
“Consumers are not scientists… they base their risk perceptions on recent data.” - Dario Luna on InsTech podcast episode 211
Dario Luna, Executive Chairman and Co-founder of Súper, shares his insights into consumer behaviour on this week’s InsTech podcast. Súper, an MGA that sells parametric earthquake insurance to individuals in Mexico, found that demand for its product more than triples in September. Earthquakes are not seasonal, but many of Mexico’s most damaging quakes in recent years have occurred in September. Dario attributes the seasonal change in demand to increased worry about major earthquakes in September. Since the podcast recording, a severe earthquake occurred in Mexico on 19 September, the same date as previous deadly shocks in 1985 and 2017.
The general uptake of parametric insurance so far is highest among large businesses, the public sector and insurers (buying reinsurance), which represent more than 85% of global parametric premiums according to our recent report. Individuals are a newer market for parametric insurance with different needs and approaches to buying cover. The experience of Súper and other MGAs selling personal lines parametric insurance shows that parametric products need to meet consumers at their point of worry: whether that is selling them earthquake insurance in September, offering flight delay cover when they book their holiday or adding a parametric catastrophe cover as an option when they renew their traditional homeowners’ insurance policy.
Tropical cyclone: managing tomorrow’s climate risk today
Hurricane • Flood • InsTech event
Insurers have a greater need than ever to understand the combined risk of floods and hurricanes, and how climate change will affect both. InsTech’s next evening event in London is supported by modelling companies Reask and Fathom. We will discuss how insurers are taking account of climate risks for underwriting and portfolio management. Reask provides windstorm data used as a parametric trigger by Descartes Underwriting and Swiss Re and Fathom’s flood data is used by Global Parametrics for parametric triggers.
The new way to pay for IVF
UK • Health • InsTech podcast
Gaia’s Founder and CEO Nader AlSalim joins Robin Merttens on InsTech podcast episode 210 to discuss why Nader started the company and how Gaia worked with insurers Beazley, Chaucer and Atrium to create the world’s first IVF insurance product. Gaia offers a parametric IVF (in vitro fertilisation) insurance product, triggered by a ‘no live birth’ outcome of IVF treatment. Patients pay a premium before each round, across up to six rounds of IVF treatment. If after six rounds there is no live birth, patients do not pay any costs for the treatment.
In the news...
Ensuro backs personal parametric hurricane product for US
US • Hurricane • InsTech podcast
Ensuro, a reinsurer that uses cryptocurrency from investors as an alternative form of capital, will provide insurance capacity for MGA Parachute. Parachute plans to launch a parametric hurricane insurance product for individuals in the south and east coasts of the US. Ensuro aims to help MGAs launch parametric insurance products by providing capacity more quickly and at a low cost. We interviewed Founder and CEO Marco Mirabella on InsTech podcast episode 164.
ChAI partners with S&P Global on commodity price insights
Commodity prices • InsTech interview
ChAI, an MGA that is building a parametric insurance product to help companies manage commodity price risks, has entered into a data licensing agreement with S&P Global Commodity Insights. ChAI previously provided price forecasting for exchange-traded commodities. Its partnership with S&P Global now allows it to forecast prices and design parametric products for a wider range of materials, such as plastics and steels. You can learn more about ChAI by reading our recent interview with Co-founder and CEO Tristan Fletcher.
Arbol to open Singapore office for APAC expansion
APAC • Climate • InsTech podcast
Arbol, which provides parametric climate and weather risk management solutions for businesses, is opening an office in Singapore to expand its coverage in the Asia-Pacific region. Arbol is headquartered in New York and wrote more than $100 million USD in premiums for parametric insurance and weather derivatives in H1 2022. Arbol’s Founder and CEO Sid Jha spoke about the company’s growth on InsTech podcast episode 208.
Saskatchewan Blue Cross to offer Blink’s flight delay solution
Canada • Travel
Saskatchewan Blue Cross, part of Canadian not-for-profit benefits and insurance provider Blue Cross, is using Blink Parametric’s software solutions to launch a parametric flight delay service for its policyholders, through its partnership with insurance provider Canassurance. Blink provides white-label parametric insurance solutions for insurers and brand partners. It has worked with Blue Cross elsewhere in Canada since 2018.
Case study: parametric hail insurance for car dealerships
US • Hail • Sensors
Car dealerships in areas highly exposed to hail often struggle to find sufficient coverage from traditional commercial insurers. Parametric insurance MGA Descartes Underwriting’s latest white paper describes how a dealership in Texas experienced $680,000 USD in damage after a severe hail storm in 2021. Its existing commercial property policy had a $250,000 USD sub-limit, leaving significant uncovered losses. Descartes structured a parametric solution for the company, based on hailstone size measured by an on-site sensor. This cover would have paid $680,000 USD during the April 2021 storm.
Personal aid payments triggered by Hurricane Ian
US • Hurricane • Humanitarian aid
Aid agency GiveDirectly has offered $700 USD to nearly 3,500 Florida residents after a Google machine learning tool assessed that they were among the worst hit from Hurricane Ian. The pilot project uses storm damage data and poverty data to trigger delivery of aid, similarly to parametric insurance. GiveDirectly made similar payments in Puerto Rico after Hurricane Fiona last month.
Parametric insurance in Latin America in 2022
Insurance lawyers network Insuralex is hosting a webinar about regulatory and market trends for parametric insurance in Latin America on 26 October 2022. The panel event in English and Spanish includes speakers from Lloyd’s, MiCRO, Lockton and InsTech’s Henry Gale.
Zurich launches weather cover for Indonesian coffee farmers
Indonesia • Weather • Agriculture
Zurich Syariah, part of Zurich Insurance Group which provides Takaful (Shariah-compliant) insurance products in Indonesia, has launched a weather index insurance product for coffee farmers. The product, created with MGA Blue Marble, covers excess rainfall and drought. Through a partnership with Nespresso, 1,500 farmers will be covered in the first year.
Using USGS ShakeMap for parametric earthquake transactions
The most common trigger for parametric earthquake policies is ‘cat in the box’; the policy pays out when an earthquake meets a certain magnitude and its epicentre is within a predefined area. The alternative trigger uses ‘intensity at location’; pay-outs depend on how much ground shaking is experienced at the policyholder’s location, often relying on data from the US Geological Survey’s (USGS) ShakeMap. Guy Carpenter’s blog post examines what companies need to consider when choosing between a ‘cat in the box’ solution and an ‘intensity at location’ solution for parametric earthquake cover.
Find out what you've missed...
Issue 34 – New ways to combine parametric and indemnity covers
Issue 33 – Parametric MGA to parametric insurer
Issue 32 – Tornadoes: a peril to watch in parametric insurance
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