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Parametric Insurance2021 outlook and the companies to watch

About Instech London

InsTech London was founded in 2015 and has grown to become one of the most active networks of companies driving innovation through the use of technology, data and analytics in insurance and risk management. The two executive partners, Matthew Grant and Robin Merttens, each have over 30 years’ experience of bringing new technologies into the global insurance market. Today InsTech London runs regular events (live and digital), a weekly podcast and provides advisory services to its members. We are extremely grateful to our corporate members, now reaching 100, and an extended community of over 10,000 people who keep us honest and informed about what is happening in insurance, technology and beyond.

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This report has been prepared by Matthew Grant and Parmjeet Kaur, founder of InsurePro, with support from our sponsors and the broader InsTech London community.

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The information in this report is drawn from a variety of sources. This includes our own experience, interviews and live discussions at our events with founders, executives, investors and others active in this area. Further information has been gathered from public sources such as company websites and news items. We have not independently verified all of the information in this report and InsTech London assumes no responsibility for the accuracy and completeness of what is written here. This report is for information only and the views expressed here are not intended to be used as advice or recommendations beyond general observations of trends and themes. The reproduction of all or part of this report without the written permission of InsTech London is prohibited.

Future reports

Parametric Insurance is one of the 10 themes we believe will be driving change in insurance in the next decade. To learn more about InsTech London, our forthcoming themes, review recordings of our live events or to discuss hosting an event with us, you can find us atwww.instech.london and contact us at [email protected]. If you believe that your business, or another, should be included in our future reports then please contact us by email [email protected].

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INSTECH LONDON Parametric Insurance | 3

IntroductionInsurtech emerged in around 2015 as new entrants looked to challenge traditional insurance by providing a better client experience, access to new capital and ways of insuring the uninsurable. The expectation was that this could be powered by massive amounts of new data, sophisticated analytics and powerful computing technology. Insurtech, as it was originally conceived, has not yet delivered any major changes to how conventional insurance is offered, but parametric insurance does have potential in all these areas. The lure of parametric insurance is the ability to increase the certainty between a loss occurring and a pay-out being made, quickly, accurately and cheaply.

Parametric insurance is not new, but it has seen the most success in providing alternatives to property catastrophe reinsurance, an important but somewhat niche product. A handful of micro-insurance offerings have used parametric triggers. Weather derivatives providing hedges against extremes of heat or rainfall have been around for a couple of decades but take up has been slow.

This is changing. Parametric covers are now being considered across the full spectrum of risk types and sizes. Technology exists to define and deliver insurance coverage based on real time reporting of accurate data. Parametric insurance is starting to offer attractive solutions where conventional insurance has failed. Some of the largest insurance organisations, most notably Munich Re, Swiss Re and AXA are structuring innovative placements. New companies are emerging and finding customers and investors within and outside of the insurance industry. It is clear the need exists, but most use cases are still in early stages. The opportunity is there to become a leader in providing new forms of insurance for insurers, investors and start-ups and the door is open to established organisations from outside of insurance.

One of the biggest challenges is to achieve scale. Insurance operates most effectively when hundreds or even billions of dollars of protection is offered. There are benefits from diversification and lower costs of implementation. As with any new business idea, even the best parametric insurance ideas will fail if they don’t offer compelling solutions to real needs. Creating a parametric index is getting easier and cheaper. Some data sources and indices are free. The major costs will be in marketing and distribution. Early success stories will be crucial as will collaboration with partners.

So why did we produce this report? Parametric insurance is at heart a simple concept, but it can appear confusing given the diversity of offerings and companies in this space. At InsTech London we look for the companies, both new and old, offering data and analytics, then explore where these fit between the customer and the capital. It is refreshing to hear from new companies, but established ones should not be ignored. Many of the companies active in parametric insurance offer what appear to be blended solutions of technology and insurance. Most of them aim to make money in only one of three core areas: distribution, data and analytics or underwriting.

This report is not intended to be totally comprehensive. Our aim is to provide context around what parametric insurance can offer, where it has come from and where it may end up. We have identified some of the companies we believe are already demonstrating leadership in this space and those that are worth keeping an eye on for what may emerge in the next few years. This report would not have been possible without the support of all the companies and people we have spoken to, or who have joined us for our variety of events and podcasts over the last five years.

Matthew Grant Partner InsTech London


Contents

Why this matters

Overview

Why parametric is different

The market need

A short history of parametric insurance

Covid-19 and parametric insurance

Understanding the value chain

What can be covered with parametrics

Markets

The solution providers

The technology

Company profiles

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Why this mattersIf any of these five themes are relevant to you, then it’s worth learning more about parametric insurance:

• The ability to provide insurance in areas of the world, or types of risk, that are today considered uninsurable.

• Taking advantage of the emergence of new and reliable data sets across multiple industries.

• New opportunities for companies from outside of insurance to provide solutions.

• Innovative approaches to loss prevention and mitigation through risk management and disaster financing.

• Learning about where parametric insurance has been successfully used as an alternative to traditional insurance in the last twenty years.


Insurance Category(by number of providers)

OverviewSwiss Re estimates that in 2019 there were around $140 billion of economic losses from natural and man-made disasters. Traditional insurance covered only $56 billion (40%) of that. With the increasing risk from climate change, and denser populations, losses will continue to rise. Without a new approach to conventional insurance coverage most of these costs will still not be recovered by those affected.

Covid-19 has shown that the lack of insurance protection is even greater amongst more complex and infrequent risks. There has been confusion about what was covered and what was not. We are now aware of what a global pandemic can do but other threats remain. Insurance organisations, and their regulators, demand increasingly robust underwriting pricing and capital management approaches. This regulation, and a reluctance of most major insurers to provide cover for losses that are hard to quantify, is adding to the growing insurance protection gap.

The shift in corporate asset values from the tangible, such as property, to intangibles such as cyber loss, intellectual property (IP) or reputation further exacerbates this problem. Intangibles is an area of focus this year for Lloyd’s, which released its report “Protecting Intangible Assets: Preparing for a New Reality” warning that this area could be the next “blind spot” for insurance.

As this protection gap gets larger and broader, and traditional approaches to insurance fall short, significant opportunities are opening up for those able to develop fresh solutions to the problem. New types of financial protection are coming from within the insurance industry and from outside. Large global organisations such as Google and Mastercard, as well as more recent challengers such as Tesla, are realising the power of their existing data and analytics. At the same time, the traditional insurance market is recognising the need to be more flexible in how it enables new ideas. Lloyd’s for example, is allocating a 2% innovation “capacity budget” when assessing the capital requirements of its managing agents. It has launched the Lloyd’s Lab and the Product Innovation Facility (PIF). Together these will provide more flexibility in how capital requirements are assessed, enabling faster decision making for the underwriting of unusual risk types, and a market wide approach to providing new solutions.

“Parametric insurance is starting to offer

attractive solutions where conventional

insurance has failed.“


Almost all insurance has traditionally focussed on paying out a claim based on the value of the loss incurred. Parametric insurance is different. It pays out based on the occurrence of an event, as measured by a trigger or index. With traditional indemnity-based insurance, the amount the customer is paid is based on some or all of the cost of reinstating what was lost. Indeed, in many countries, it’s a regulatory requirement that there is a loss that is at least as great as the financial payout.

With parametric insurance, the amount paid out is generally not defined by the financial cost of the loss, but is determined by the size of an event (for example hurricane windspeed) or performance of an index (for example hotel occupancy rates). A well-designed parametric trigger from the event or index is structured so that the payout closely correlates to the loss suffered. The potential shortfall between customers’ financial loss and the parametric payout is termed the basis risk.

Customers will usually tolerate some basis risk in return for the benefits that parametric insurance brings but it is a possible barrier for widespread adoption.

Parametric insurance today is best suited for providing cover when there is no alternative, or it is cheaper than, traditional insurance. Parametric insurance structures are attractive to capital providers from outside of insurance because there is little, or no, requirement for them to understand the inherent risk in their customers and their assets. In conventional indemnity insurance, pricing the risk of a loss from the customer and their assets (both tangible and intangible) is hard. The customer usually has the advantage of knowing more about their own risk than their insurer. For parametric insurance this information asymmetry is removed. Both parties have access to the same information about the likelihood of an event occurring and a trigger being breached.

Why parametric is different

The essential elements of parametric insurance are as follows:

Event Driven – parametric policies are based on an ‘event’ occurring with payments based on pre-agreed parameters.

Index – a reliable, trusted data source that provides an event specific score.

Event Triggers – that determine if a loss has occurred. Triggers are based on an index reaching a certain size.

Basis Risk – payments are not based on the actual loss, but by the triggers. The amount paid out may be lower or higher than the actual loss.

Faster Claims – claims can be settled more quickly, the triggers are independently verifiable allowing automatic validation and payment of the claim.

Smart Contract – the embedded rules and technology that automatically make a payment once the trigger has been reached. It may be possible to remove any human intervention.

Flexible Term – these can be multi-year, or for periods of less than a year.

Broad Coverage – as long as the index provides coverage, the scope of cover can be greater than a traditional insurance cover.


Parametric insurance is fulfilling one of two needs for buyers:

• Losses are frequent and high, with very localised impact. Insurers struggle to set prices accurately or find that the correct “technical price” is too high for the market to accept. Insurers may refuse to offer cover or make it so expensive that no one buys it. This is what is happening with flood insurance around the world and is the problem Floodflash is hoping to solve in the UK.

• Individual coverage is very small and therefore it is relatively expensive to sell and settle claims. Farmers in developing countries have been among the first to benefit from parametric insurance. The African Risk Capacity facility is helping address the impact of drought. Blink offers flight delay insurance to airline passengers.

• Conventional insurance is expensive, slow to settle and may have a large deductible. Policy holders often benefit from rapid payment of some funds immediately after a major disaster. In the US homeowners can now buy hurricane or earthquake insurance to receive instant payment of funds for short-term expenses after a disaster, from companies such as JumpStart or StormPeace.

• Conventional insurance is available, but it has shortcomings that can be overcome with parametric insurance.

• Conventional insurance is not available at all. Parametric insurance offers an alternative that may be imperfect but is preferable to having no cover.

Today, parametric solutions are being used in different niche markets. The general concepts are similar, but the scope and scale of the coverage varies very significantly with payouts ranging from a few cents (micro-insurance) to hundreds of millions of dollars (catastrophe bonds).

Conventional insurance may be inadequate for one of a number of reasons:

The market need

Non-traditional entrants to market(by number of providers)


The use of indices to trigger payments has been at the heart of many financial market instruments for decades. Weather derivatives that provide payout for extremes of heat and cold have been available for companies looking to hedge against trading losses for over 20 years. Accident and health insurance which offers coverage for specific events such as broken bones, hospital days and accidental death is also a form of parametric insurance. In property and casualty insurance the use of parametrics has, until recently, been limited to offering reinsurance, or alternatives to reinsurance, for large catastrophic losses such as hurricanes. The simplest of these reinsurance structures are known as Industry Loss Warranties (ILWs) where the payout to an individual insurer is based on the loss to the total market, rather than the loss to an individual company. The last couple of decades has seen the development of the Insurance Linked Securities (ILS) market, with the creation of catastrophe bonds, commonly referred to as “cat bonds”. Today this market provides around $100bn of cover and

has attracted capital market funds looking for the investment diversification benefits offered by the insurance market. Individual cat bonds commonly provide cover for many hundreds of million dollars to a single insurance (or reinsurance) company.

Approximately 15% of cat bonds sold in the last 20 years have used a parametric trigger. Although still mostly sold to insurers, some corporations and other organisations have purchased cat bonds with parametric triggers as an alternative to conventional insurance. For example, the New York Metropolitan Transit Authority (MTA) purchased storm surge cover after the experience of Hurricane Sandy in 2012. The analytics for transactions in the ILS market has been almost entirely dominated by three companies: AIR, RMS and Corelogic (see sidebar). In recent years MGAs (Managing General Agents) have been set up to offer more localised cover, for example hurricane insurance top up, but to date the market has been slow to grow outside of the large insurance and reinsurance transactions.

A short history of parametric insurance

Split by business type(by number of providers)


The scale of the Covid-19 pandemic may have been a surprise to many people, but the potential was well known to scientists, modellers and many insurance companies. US based Metabiota partnered with broker Marsh to provide a parametric product in 2018, but it appears no one purchased it. Only a handful of organisations, most notably the UK’s Lawn Tennis Association, organisers of the Wimbledon championships, purchased explicit pandemic insurance cover. The largest, and possibly only, parametric bond for pandemic was launched by the World Bank in 2017. It provided $320 million of cover to help developing countries tackle outbreaks of infectious disease. One of the triggers for the bond was the number of deaths, and although the bond paid out close to $200 million in April 2020 it has been criticised for a structure that did not enable funds to be released earlier when they could have had a greater impact.

Now that the potential for another future pan-demic is widely acknowledged, discussions are

Covid-19 and parametric insurance

Catastrophe modelling and parametrics One of the greatest opportunities today is for companies that are able to identify, or even create, indices and develop the analytical engine that creates the essential source of trust for parametric insurance. Yet for the first twenty years of parametric insurance the industry was dominated by three companies, which were responsible or involved in almost every major parametric structure.

From 1996 until a few years ago AIR, Corelogic and RMS were the only credible choice for modelling property catastrophe insurance and reinsurance in the major economies of North America, Europe and Japan and so were the natural choice, and had the resources to act as modelling agents for ILS catastrophe bonds. In most countries the issuers and modellers also benefitted from well established, independent indices that were already being used by the scientific community such as earthquake intensity published by USGS (United States) and JMI (Japan). Obtaining accurate wind speeds proved a bit trickier.

Despite the widespread existence of windspeed recorders along the US East coast, it was found that many of them were not designed for hurricane force winds and failed to register the largest windspeeds or simply blew away. This led to the formation of Weatherflow which today has installed and maintains hundreds of hurricane-hardened windspeed recorders in the US.

progressing as to what the role of insurance should be, or could be, for losses that could be in the hundreds of billions of pounds. If coverage is adequately priced, and reserved for, and with the support of a government backstop, the insurance industry should be able to provide coverage for a future pandemic loss of up to $200 billion or more. This may seem high, but such a level of loss is similar to the total of all losses paid by insurers in a “bad” year of natural disasters. The experience of many people and companies in 2020 has demonstrated the challenges of defining what is, and what is not covered by pandemic insurance. The use of parametric insurance as part of the solution is now being considered. A payout could be triggered by, for example, recorded cases of infections from a pandemic, or number of deaths. If this does become part of the solution, it could be the most significant example of the use of parametric insurance ever.


Parametric Insurance Value chain

Parametric insurance is fundamentally looking to achieve the same results as that provided by con-ventional insurance. A company or person buys protection to give them a future financial pay-out when there is a loss. This insurance protection is provided by a third party. When a loss occurs a payment is made. The role of parametric insu-rance is to create a reliable, and cost effective, way to convert a loss making event into a payment to the buyer. The input (a loss event) and the output (a payment) remaining the same, or as close as possible.

The opportunity provided by using a parametric structure is that different, and new, organisations can insert themselves between the buyer and the capital to offer a more frictionless transaction, saving on cost and improving the certainty of payment.

Whilst intellectually elegant, in practice the creation of parametric covers that meet regulatory requirements, and are credible to buyers and attractive to the capital providers, can often involve multiple parties.

To understand the companies offering parametric insurance solutions it is important to distinguish between the size of the cover being offered. This can range across the insurance spectrum – with the most common examples to date being either very large losses of hundreds of millions of dollars replacing conventional reinsurance, or for very

Understanding the value chainsmall losses in hundreds of dollars or less paid out to individuals. There are also some examples where parametric insurance is being offered to corporate institutions by companies such as Swiss Re, Munich Re, a handful of new MGAs or now, through the Lloyd’s PIF initiative. The significant differences in the scale of the coverage mean there are major differences in how the parametric insurance is structured and the role of all companies in the value chain.

Since 2015 there has been an increase in companies setting up as MGAs that offer underwriting ability complemented by their own analytics. New Paradigm Underwriters and Descartes Underwriting are two of the most active in structuring parametric insurance for individual companies or locations. Others, such as CelsiusPro, have focussed on providing the analytical platform and aggregating multiple data sources. In some areas of the world insurance facilities, such as the African Risk Capacity, MICRO and CRIFF, provide an efficient way to offer a single source of insurance to governments to support their own disaster recovery efforts, and these are increasingly using parametric triggers related to drought, rainfall or cyclone.

To help illustrate the concept and identify the role of the existing and emerging companies in this space we have simplified the value chain into the five different stages shown below.


“Conventional insurance is expensive, slow to settle and may

have a large deductible.”

The client, this could be an individual, a small business, large corporation, insurer, NGO or a government.

The broker or intermediary that sells the product to the client. The broker engages with the capital provider and the analytics agency and may in some cases have a role in bringing together the various parties to create new structures. An intermediary is not always required. For small, simple offerings (e.g. Jumpstart or certain microinsurance offerings), a direct to consumer model exists.

The index is the source of information that is used to determine if a parametric payout is triggered. The index may be proprietary, developed and maintained by one company or can be derived from publicly available information. The index must be neutral and operate independently of any of the parties. The reinsurance market has used industry losses for catastrophic events published by PCS (part of Verisk) as a trigger for payment of Industry Loss Warranties and some catastrophe bonds for many years. Hurricane wind speeds are also commonly used, as are measures of rainfall or flood depths. Flight delays, footfall and hotel occupancy rates have also been used, or explored, as indices or triggers.

The analytical agent converts index data into the trigger. The index may itself be sufficient to use in its original state, for example flood height at a building fitted with a sensor. In other cases the index will need to be derived from open source or proprietary data. For smaller and simple coverage, the function of the analytic agent may be fully automated using a smart contract to initiate a payment. For larger, more complex transactions, there is likely to be a need to process the data from different sources to come up with a robust and independent payment trigger and validate that a loss has occurred. A company may be retained to perform the function of the analytical agent. In some countries (including the US and UK), the policy holder may be required to verify that a loss has occurred before a payment is made.

The smart contract is used to convert the payment trigger into funds that are paid, often but not always, automatically to the client. A few years ago, smart contracts were given as one of the proposed use cases for blockchain. Today, references to the use of blockchain have almost disappeared. Some parametric insurance offerings use the simpler distributed ledger technology (DLT) to trigger, for example flight cancellation payments, but even DLT is not an essential requirement for smart contracts. Whilst parametric insurance remains in its infancy, the use of smart contracts to automatically trigger payments is likely to be limited to small (sub $1,000) payments.

The capital provider is responsible for making funds available to settle the payment. Funds may be placed with a third party and held in escrow to facilitate rapid payment and to remove any credit risk against the capital provider.


Natural catastrophes such as hurricane and earthquakes have, for the last century, been one of the largest sources of loss to the insurance industry and to society as a whole. Weather related losses are now becoming even more of a threat due to the impacts of climate change. Disasters are likely to continue to drive a significant volume of the parametric insurance transactions for many years to come. One recent example of a parametric insurance payout is the Caribbean Catastrophe Risk Insurance Facility (CCRIF)

Climate risks and natural disasters

payment of $11 million to the Government of Bahamas when Hurricane Dorian exceeded the trigger windspeed threshold in 2019. In the last five years, new companies have started to emerge offering insurance coverage and analytical agents for other perils such as earthquake, flood and wildfire to complement the data and analytics from established modelling companies and government agencies.

The requirement for a trusted data source that is used to define the trigger has, in the past, usually limited parametric structures to specific weather derivatives or catastrophe based insurance and relied on publicly available data sources such as windspeed. Now, with more access to data from sensors and the Internet of Things (IoT), and the creation of industry indices such as those created by, for example, Reptrak to measure reputation, the potential for new types of coverage is growing.

What can be covered with parametrics


The commoditisation, and resulting reduction in cost, of sensor technology is leading to increasingly widespread deployment of sensors across many industries. Sensors, and the broader Internet of Things (IoT) ecosystem has the potential to be a major source of opportunity for parametric insurance. The first widespread use of sensors in insurance has been to support telematics for usage-based insurance (UBI) in motor. Whilst these are generally not parametric type offerings, the use of UBI insurance for groups that would otherwise find insurance prohibitively expensive, such as young drivers, demonstrates the potential for technology enabled underwriting to play a vital role in making insurance more affordable. The use of sensors can support the introductions of incentives by insurers to improve risk management practices for customers of all types.

Outside of motor insurance, insurers have had less success in using IoT to directly impact insurance pricing. The use of data from sensors in buildings, plant or vehicles is now being explored as a partnership with forward thinking corporate clients to help with risk mitigation. Chubb, one of the leaders in this area, is focussing on a strategy of “Predict and Prevent” for its customers and Munich Re purchased Relayr, founded in 2013, which deploys sensors on machinery. Over time, data from applications such as these can be used to identify patterns of behaviour associated with losses, which can help to calibrate and set parametric triggers.

One new company piloting an IoT approach to parametric insurance is Parsyl, a graduate of the Lloyd’s Lab cohort. It is using installed IoT temperature sensors deployed in transport containers and third-party data to reduce the risk of loss to perishable cargo.

Indices that track market performance such as hotel occupancy, retail footfall, system downtime or reputation already exist for other purposes and can be repurposed for parametric insurance. Examples for insurance applications are emerging to cover terrorism, product failures or cyber loss. Springboard’s PedBox, which measures footfall outside shops, and Mastercard’s use of transaction volumes by location, open up the possibility for using parametric insurance to provide improvements in business interruption coverage.

Assessing cyber risk continues to be difficult, and despite the emergence of companies such as Cybercube providing catastrophe cyber modelling, there are still very few cyber parametric insurance offerings. The “WonderCover” product released by Qomplx earlier this year, supported with capacity from Chaucer insurance is an innovative example of using a simple trigger (downtime) to drive the payment. No public cyber catastrophe bonds have been issued yet but are being considered.

Other loss types


Total Cat Bond & ILS Issuances vs Parametric Issuances2000 - current (USD)

Source : Artemis Deal Dictionary

Farmers and agriculture

Swiss Re estimates that global agricultural production is worth circa $1.3 trillion per annum with only 25% of that production being insured. About 80% of crop losses are associated with drought. Farmers and other industries associated with agriculture have been using weather derivatives for many years. There is generally a high correlation of extreme weather conditions to crop losses. With increases in higher resolution aerial imagery and the ability to measure soil moisture content remotely, indices can be created cheaply, quickly

and precisely. Insurance, or structures to support post disaster funding, are now being offered from the level of individual fields all the way up to entire countries. Global Parametrics, for example, is structuring coverage via its fund to NGOs, governments and charities, and new companies such as Arbol are focusing on individual farmers. The two organisations recently worked together to provide coverage for coffee farmers in Costa Rica. Agriculture and fisheries are likely to be one of the greatest growth areas for parametric insurance.

The catastrophe bond, or ILS market, has been the most rigorous test of the ability to create, and use parametric insurance in two decades. The performance of parametric catastrophe bonds in the past has not been without its challenges. For example, faulty recording equipment meant that the windspeed triggers designed to offer protection from hurricanes to the Mexican government initially failed to provide the expected payout from hurricane Odile in 2014. This, and

other bonds where triggers did not perform quite as expected, were ultimately settled, but they are a reminder that parametric insurance is still evolving.

The Artemis.bm deal directory lists the catastrophe bonds issued over the last 20 years. The chart below shows that parametric triggers continue to remain a small component of overall issuances in the market in terms of value and have not followed the growth of this market in the last five years.

Markets Insurers and reinsurers


Small and Medium Sized Business

The SME (Small Medium Enterprises also known as SMB in the US) market makes up over 95% of business in the UK. In 2018 the UK Financial Conduct Authority (FCA) highlighted the underinsurance of the SME sector as a major concern. The situation is similar around the world. SMEs rarely have a dedicated risk manager or insurance buyer but can be the most vulnerable to a major loss. Parametric insurance options are becoming available for this

Corporate buyers

Large corporates are increasingly integrating how they manage their risks with how they buy insurance. Many have their own in-house captives providing some insurance protection and insurance is bought by a dedicated risk manager. In addition to traditional losses to property from, for example, fire, these companies are increasingly exposed to major losses to their intangible assets, such as Intellectual Property, cyber or reputation, where insurance is limited in scope. In the UK AIRMIC (the Association of Insurance and Risk Managers) is promoting parametric insurance as a potential solution for its members. There have been a handful of corporate parametric transactions

Microinsurance

The provision of insurance, and other funding, to countries and communities that could not otherwise afford protection has helped drive adoption of parametric covers. Agriculture is one of the key areas that receives protection, but losses to small business and individuals from flood, wind and earthquake may also be covered. Microinsurance is typically offered by partnerships between governments, aid agencies, insurance or other financial capital and analytical agents. The

need for the entire transaction, from collecting the premium through to claims collection to be undertaken at very low cost has driven innovation in how insurance is sold, claims are triggered and payments settled. An early example of parametric insurance was the use of the M-Pesa mobile phone payment network in Kenya that embedded insurance in bags of seeds or fertiliser, with a payout triggered by extreme weather.

sector. Israel based Parametrix and Qomplx offer cyber business interruption and FloodFlash is installing sensors on individual buildings. Some small business owners are starting to buy insurance directly online, but the majority rely on advice from a broker. Educating brokers on the benefits and options available with parametric insurance will be essential to achieving scale in this market.

comparable in size to natural peril catastrophe bonds. The Golden Goal bond was structured to provide cover to FIFA in event of the cancellation of the 2006 World Cup. Demand has not yet picked up. For a corporate to shift or expand its insurance cover to parametric requires the support of the CFO and potentially the board. The basis risk, and other uncertainties related to payout, are still a challenge. The most likely areas for parametric insurance for corporates in the future looks to be cyber and pandemic cover. The work that Lloyd’s is doing around intangible assets could accelerate innovation here too.

“The opportunity is there to become a leader in providing

new forms of insurance”


Life and Health

Life, accident and health insurance have been using a form of parametric insurance for many years. Policies make for sobering reading with different payments made depending on, for example, which limbs are lost. Critical illness protection cover is available that pays out depending upon the type of disease diagnosed. The use of wearables has become popular to encourage healthy activity, rewarded with lower insurance costs by companies such as Vitality Health. Despite the shortcomings of the World Bank pandemic bond, the search is on for workable solutions to future pandemics. GENRIC Insurance Company, in South Africa, has launched Pandemic Shield which pays a lump sum

if the policy holder is hospitalised as a result of a Covid-19 diagnosis, or any other WHO-declared pandemic illness in the future. The benefit trigger is a hospital admission longer than 48 hours. Vitana has come out of the Metlife Singapore’s LumenLab. Payout is triggered if gestational dia-betes is diagnosed in pregnant women. Vault Dragon provides access to the medical records and Swiss Re is the insurer. If further proof is required that parametric insurance can reach places other insurance cannot, then Bsurance’s relationship with PlayBrush to offer connected tootbrush dental insurance is worth a look.

Personal lines

Parametric insurance will most likely evolve in personal lines where the insurance is completely embedded in a separate purchase and effectively invisible to the buyer. The most frequent application of parametric insurance in personal lines to date has been in flight cancellation insurance. Blink, which started in 2017, has created a white label platform for its partners that sell flight cancellation as an option when a flight is bought. Flight cancellation insurance works because the data is robust and free to access. Even for this relatively simple concept, the withdrawal by AXA of its Fizzy flight cancellation insurance, and difficulty that Etherisc has had of

moving beyond a pilot illustrate the challenges of selling a new type of insurance to consumers.

Homeowners in the US are now able to purchase coverage to provide top up payments to help in the immediate aftermath of a disaster. Jumpstart is offering earthquake coverage of $10,000 in California and Assured Risk provides coverage for hurricanes. Both operate as surplus lines insurers. The First Insurance Company of Hawaii recently launched a parametric insurance cover, FirstTrack, and residents of Puerto Rico will soon be able to purchase similar cover through Raincoat.

The Kentucky Fried Chicken IndexGetting an accurate understanding of the windspeeds that have occurred after a hurricane is essential in creating and determining index levels for parametric covers. Accurate windspeed recordings from storms are also important when building and calibrating catastrophe models. The damages caused by Hurricane Georges in Puerto Rico in 1998 were a valuable source of information for catastrophe modeller RMS when it was upgrading its Caribbean model the following year, but there were only a couple of observations from recorders that had survived the extreme windspeeds that had hit the island.

Dr Robert Muir-Wood, at the time head of model development for RMS came up with a novel way to map the windfield. He noticed that Kentucky Fried Chicken restaurants were very popular, and there were about thirty of them located across the island. They were all insured under the same policy and each restaurant had been built to one of two designs. The claims assessor had loss percentages identified for each restaurant, from which the RMS modelling team was able to create a representation of the hurricane windspeeds at sufficiently high resolution to map the storm footprint.

No one has yet structured a parametric insurance product based on the destruction of identical fast food outlets, but finding innovative ways to develop reliable indices from existing data sources will be an essential part of expanding the opportunities for parametric insurance across all loss areas.


Origin of solution providers(by number of providers)

The establishmentBrokers, reinsurers, insurers, investment funds and catastrophe modellers

With the largest parametric structures being catastrophe bonds, the major reinsurance brokers, Aon, Guy Carpenter and Willis have played key roles as intermediaries. Almost all of the major global insurers and reinsurers have issued catastrophe bonds at some point over the last two decades, with Allianz, Munich Re, Swiss Re, SCOR and Tokio Marine being amongst those that have specifically issued parametric bonds.

Investors in catastrophe bonds include both tradi-tional insurance groups with dedicated investment funds (such as Renaissance Re, Hiscox, MSAmlin) and new entrants that have focussed on managing third party capital acting on behalf of investors

such as pension funds. Artemis.bm list 52 ILS investment managers, the largest being Nephila capital (now owned by Markel) with over $10 billion assets under management (AUM). The modelling of catastrophe bonds has been dominated almost entirely by Verisk’s AIR, RMS and Corelogic (formerly Eqecat). All these companies are likely to continue to have major roles going forward.

Swiss Re, Munich Re, AXA, Liberty and other large insu-rers and reinsurers have also been active in structuring smaller, corporate transactions and the reinsurers brokers are supporting the major parametric focused facilities such as CRIF and MICRO.

The solution providersWith the diversity of coverage types, the different roles played by companies offering solutions for parametric insurance, and the increasing talk about the potential for parametric it can be difficult to identify which organisations are already playing a key part, versus those that are still in pilot stage or earlier.

One perspective is to consider three categories of organisation.

The establishment companies, those that have been actively developing, structuring, or selling parametric solutions for ten years or more. Almost all are large companies offering multiple services with parametric only being a small part of what they do.

The outsiders, those that have robust, proven technology, data or access to funding, but which have not yet been active in providing parametric insurance or derivatives.

The new entrants, the companies that have formed in the last five years or so, many with a focus on parametric or parametric related solutions such as sourcing and processing data.


New entrantsMGA, analytics, data scraping

As noted previously, parametric insurance offers an opportunity for new entrants into the market to collate new sources of data, become an analytical agent or offer new forms of capacity. The opportunity is particularly strong where no insurance is available or if what is available is inadequate.

Some emerging companies are tackling old problems in new ways. Exante and Jumpstart provide funds to top up insurance payouts before, or immediately after events. Super.mx is using parametrics to improve the insurance experience for companies in Mexico looking for earthquake cover. Global Parametrics is tackling the problem of disaster financing at scale with a fund supported by the governments of the UK and Germany and reinsurer Hannover Re.

Some venture capital investors, such as Anthemis and Insurtech Gateway, are interested in companies that are focussing on parametrics. Portfolio companies still need to have strong core propositions with the potential to scale quickly. Investors typically look for founders that have existing expertise in insurance and analytics.

The issue of how to scale is a core challenge for all start-ups and particularly those companies offering parametric insurance. Many of the individual transactions are small. Raising awareness and gaining credibility requires a high investment in marketing and distribution and it may take 5 – 10 years to achieve a critical tipping point. Customer Acquisitions Costs (CAC) are high, and brokers play an important role in most transactions. Even if the products are simple, the insurance industry

insurers. Companies exploring this range from well-known global companies such as Mastercard to niche businesses such as hotel occupancy tracking company STR. These organisations have the potential to be excellent partners for any company looking to structure parametric insurance because they frequently have existing expertise, deep data and are motivated to find new revenue streams. Governments, charities and other NGOs have now accepted that parametric triggers are a cost-efficient way to provide aid and pre-event disaster funding.

will need to educate its customers and brokers on these new types of policies, and convince them that the new technology and data will reliably address their needs.

One of the greatest potential opportunities for new entrants considering parametric insurance right now is solutions for Covid-19. Parametric cover is seen as one solution to covering losses from future pandemics and there will be demand for better business interruption insurance, the removal of ambiguous exclusions and fast settlement. Incubators, accelerators and other industry initiatives such as the Lloyd’s Lab are welcoming companies with parametric ideas and can provide a safer, earlier starting point to test ideas.

In theory, parametric insurance could offer a chance for new entrants to disrupt the market, tapping into new sources of capital and finding new routes to customers. In practice the cost and regulatory restrictions, and difficulty of changing buyer behaviours mean that few, if any, of the new entrants can operate independently of established insurance companies. Partnerships between the new entrants and the establishment are essential. Examples of recent partnerships include Generali providing capital and access to its client MGA Descartes, insurance broker Gallagher providing a route to market for FloodFlash and Lloyd’s insurer Chaucer providing capacity to Qomplx. As the newcomers grow, we can expect more acquisitions by insurance organisations looking to bring parametric solutions in house to complement their existing offerings such as the purchase by BGC of Meteo Group in 2020 via its broking subsidiary Cooper Gay.

The outsidersSatellite imagery, NGOs, Government, Big Tech

Many parametric structures rely on third party data providers to define the index they use. Weather related triggers typically use either aerial (most commonly satellite) imagery or local sensors. Market loss triggers rely on reported insured losses being aggregated by third parties (Verisk’s PCS and PERILS). Organisations that have access to large data sources, some of whom are already using indices for applications outside of insurance, are exploring partnerships with


Global ParametricsLaunched in 2016 with the goal to redefine the market for disaster preparedness and responses, Global Parametric builds the tools needed to manage and mitigate the risks of extreme weather and natural disasters anywhere in the world. Whilst the global insurance protection gap is a problem in all countries, it is particularly acute in emerging economies where 94% of the total economic losses from natural disasters between 1990 and 2016 were uninsured.

Global Parametrics builds solutions that can be supported either via its own fund, the NDF, backed by the UK and German Governments and reinsurer Hannover Re, or the international capital markets.

The 20-strong team includes scientists, risk modelers and computer scientists, drawn from developmental finance, insurance and fund management in both emerging economies and traditional markets.

Global Parametrics works across the private, public and third sectors. It develops risk mitigation approaches to make funds available directly to the communities affected immediately after an event, or in some cases in advance. The company supports the concept of “additionality”. Its role is not to displace other providers of capacity, but to be an enabler of new solutions, and form bridges between sources of capital and innovation.

As the name suggests, parametrics play a key role in what the company offers. Global Parametrics has developed its own risk hazard platform offering indices for wind, earthquake, drought and flooding for areas of the world where building models is not generally considered commercially viable by the catastrophe modelling companies. The company also welcomes partners of all sizes that can provide other models and data.

Global Parametrics’ first client was VisionFund International. The company used parametric insurance to underpin its innovative recovery lending programme. VisionFund’s aim was to distribute funds released after an event to create loans to help families quickly restart their business, and to service their loans.

The resulting programme, the African and Asian Resilience in Disaster Insurance Scheme (ARDIS), has been recognised as the world’s largest non-governmental climate insurance programme, providing cover to a lending portfolio of over 4 million people.

Global Parametrics is continuing to explore what it calls “forecast financing” to expand the potential for risk financing that pays out before the events, typically flood or wind. Recent focus has been on Peru, Uganda, Bangladesh and Mozambique. A pilot programme was launched in partnership with Oxfam and Plan International in advance of Typhoon Ursula, which hit the Philippines on Christmas Day in 2019. On 24th December the parametric index was triggered, releasing donor funds via electronic cash transfer to those in the projected path of the storm. This gave people time to make travel arrangements to leave the area and to help reinforce resilience measures against the storm. This programme is now being scaled-up to cover wider geographies.

More recently the company has partnered with Arbol in a weather insurance pilot for smallholder coffee farmers in Costa Rica. Arbol is providing technology and its smart contract marketplace for weather risk transfer. Global Parametrics has also supported the renewal of the MesoAmerican Reef Protection Program, and a wind protection product for Tristan Da Cunha, the world’s most remote inhabited island.

Global Parametrics is a somewhat unique, and successful, example of where private public partnerships can access funds to create new solutions for existing and growing problems that would otherwise not get the attention of the larger commercial insurers, brokers or technology firms. Not only does the company have the scale and support to make a meaningful impact on the massive protection gap, but the data, analytics, indices and successful implementation of these new approaches has the potential to help other organisations such as brokers and insurers, create their own parametric structures.


At the heart of every parametric policy is the known, trusted data source that is used to define the triggers, the foundation of the actual policy.Until the last few years almost all indices were weather or disaster related, backed by specific data sets provided by national organisations or organi-sations collecting data for use in other industries.

The IDC (International Data Corporation) esti-mate that by 2025 there will be circa 42 billion connected IoT devices globally. This is more than double the 20 billion that are being used in 2020 to capture and transfer data. This data is rarely suitable for creating an index itself and requires aggregation and processing in order to publish an index that can be used as a basis for transactions.

The Index and Internet of Things (IoT)

Today, many new opportunities for indices are possible. A twitter storm, footfall in a city, mortality, cyber attacks, disease, payments and crop failure all provide the starting point for creating new ways to cover risk. These newer indices may require the development of new technology to collate the data, and tools to aggregate and make sense of it. Shepherd, Zesti.ai and GWT Insights are some of the new companies offering these services. Samsara and Honeywell, large established providers of sensors and data, are also starting to offer services to insurance.

The technologyDevelopments in technology are opening up opportunities to deploy parametric insurance, from the original sale through to the payment of claims. Micro payments over mobile phone networks, apps on smart phones, embedded insurance, smart contracts, Distributed Ledger and the adoption of IoT and sensors are getting better and cheaper. Advanced technology is not, of course, a requirement for all parametric insu-rance. As noted previously, existing indices and data are already being successfully used where these can be shown to be reliable and a good proxy for the actual loss incurred. Indeed, even if underlying technology is improving, there are still shortcomings. A hybrid model of smart technology and human oversight is likely to be required for many areas for years to come.


The excitement around the potential for blockchain has diminished considerably since 2016. Today the more generic concept of using distributed ledgers, sometimes referred to as DLT (Distributed Ledger Technology) has replaced, and simplified, the role envisioned for blockchain. A distributed ledger is a database that exists across several locations or among multiple participants, providing a more secure and reliable approach than a centralised database in a fixed location. Organisations such as R3 and B3i are exploring applications for DLT that have the potential to fundamentally change how insurance is transacted for both conventional placements and parametric insurance, but pro-gress has been slow.

Distributed ledger and smart contracts

Smart contracts are natural partners to distributed ledgers but can also be found in other parametric applications. They allow the insured and insurer to define a contract in a programmatic manner which automatically triggers a claim, and even a payment, when the terms of the parametric trigger are met. They operate on the concept of “if this then that”. Smart contracts have been most widely used on low cost, simple transactions where there is limited scope for error and no need for human interaction. Smart contracts have significant potential to reduce costs and improve the claims experience, but the lack of any claims adjustment or human intervention between a loss and a payment makes them vulnerable to errors or poor design of the original insurance coverage.

Blink Parametric

Paul Prendergast and Peter Bermingham set up Blink in October 2016. Based in Cork, Ireland Blink was acquired in 2017 by CPP, providing funding to expand the business.The first product launched was a tool to enable coverage for flight disruption, using a full parametric structure. Blink has embraced the Covid-19 period as a time for innovation, reframing its offering for business interruption solutions and aligning it to help solve some of the longstanding challenges for both insurers and policy holders.

Paul and his team recognised the importance of being able to scale distribution quickly. Blink does not sell its own insurance product. It provides a tool and platform via an API for insurers that have existing relationships anda brand. Blink has been supported byMunich Re Digital Partners and other insurance partners include Blue Cross, Manulife and Allianz.

Creating products that could be used easily by its partners and their customers has always been important to Blink. Having proven the platform with travel where the ability of

customers to self-service is a big part of the value proposition, Blink enables companies to communicate with their customers in real-time, offering alerts, status updates, service benefit options and importantly, compensation for flight delays. Building on that success, Blink Interruption is designed to address fast payments providing liquidity quickly to SMEs trading at, for example, down 30% as a result of the insured risk event occurring. Claim payouts are within 5 days. Weekly and daily payments to customers affected are available for as long as they continue to meet the revenue loss threshold during the first month of the interruption. The process is automated and measured by open-banking data on business revenue activity, where the validation of the ongoing impact on the insured risk is sufficient for claim purposes.

Given the current disagreements surrounding business interruption loss related to Covid-19, the immediacy of providing immediate claims support through an automated process, that is scalable and can sustain a business when it needs it most is likely to make Blink Interruption a very compelling proposition for the sector.


Company profilesWith the increasing awareness of parametric insurance, more companies are emerging, or repositioning themselves, as offering solutions. Most have a focus in one, or possibly two, areas but may have built technology or other capabilities to support their core business. The major insurance brokers, for example, tend to rely on brokerage income from structuring parametric solutions, but are also building or acquiring capabilities to model risk and access data. MGAs are principally interested in generating income from underwriting but have in-house expertise to assess the risk and some are building their own tools and distribution capabilities.

This catalogue of companies identifies those that we believe are the most active (the “up and running”) and those companies we have come across that either have credible propositions, or are supporting others that do, and which are expected to deliver meaningful market solutions in the next 24 months (“ones to watch”).

Many of the established brokers, insurers and reinsurers will have some involvement in parametric insurers, but these tend to be relatively minor relative to their core business. Only those companies that we know are showing strong leadership and commitment to parametric insurance are listed. No doubt others will appear in next year’s report.

The African Risk Capacity (ARC) is a specialised agency of the African Union. It was established to help African governments improve their abilities to plan, prepare, and respond to extreme weather events and natural disasters. To date ARC has mostly focussed on drought. ARC is using parametric triggers to provide contingency funding, and ARC Insurance creates pools of risk across Africa, which are then insured in the global markets. ARC is backed by global reinsurers, with Marsh acting as the primary broker and Willis Re as the reinsurance broker. The challenges of creating parametric insurance triggers was highlighted in 2016 when a parametric cover sold by ARC to the Malawi government failed to provide cover for major drought which had caused a large loss for farmers. The problem was due to how the index had been defined and ARC ended up agreeing to pay a contribution towards the losses. Earlier this year ARC reported that it had paid out $1.4 million to the government of Zimbabwe and $2.1 million to Madagascar both for drought related losses.

African Risk Capacity

Up and running

Founded, Size 2012, medium

Solutions Offered facility

Coverage Type flood, drought

AnthemisFounded, Size 2010, medium

Solutions Offered investment, portfolio companies

Coverage Type flood, snow, agriculture

InsTech London relationship corporate member; presented 2020; podcast episode 76

Anthemis is a leading venture capital investor with an interest in companies that are active in the parametric insurance space. The team brings experience from working in insurance companies including Allianz and Swiss Re. Although not directly involved in the structuring of parametric insurance, Anthemis is likely to be one of the leading sources of funding for new entrants that bring data, indices, calculation agent capabilities and distribution. Relevant companies in the current portfolio include Demex, Insurdata, kWh analytics, Stable and Tremor. Anthemis was an investor in Climate Corp, sold to Monsanto in 2013 for $1.1 billion.

https://www.brighttalk.com/webcast/18171/438720?utm_source=brighttalk-portal&utm_medium=web&utm_content=instech%20,%20anthemis&utm_campaign=webcasts-search-results-feed

https://www.instech.london/podcast/ruth-foxe-blader-partner-anthemis-group-investing-create-new-opportunities


Aon is the largest global insurance and reinsurance broker and has been developing alternative risk structures for its clients for over 20 years. The company provides catastrophe modelling to its clients using the main proprietary modelling tools (AIR, Corelogic and RMS) and complements this with its own catastrophe modelling subsidiary, Impact Forecasting. Aon’s Weather & Climate Risk Innovation network provides parametric solutions to help its clients manage the impact of extreme events and recently structured cover for Microsoft. In November 2018, Aon launched a non-damage business interruption (NDBI) cover designed to protect companies, such as Uber or Airbnb, with large amounts of intangible assets. Terrorist threats, cyber attacks, inclement weather and pandemics may not cause physical damage, but can significantly disrupt cash-flow for hotels, retailers and transport companies. Aon has used independent hotel data benchmarking to trigger a payment if a hotel’s revenue per available room (RevPAR) metric falls below a certain threshold.

Founded, Size 1821, large

Solutions Offered broker, distribution, modelling, structuring

Coverage Type wind, earthquake, freeze, wildfire, hail, flood

InsTech London relationship corporate member; presented 2020

Aon

AXA Insurance

AXA employs 160,000 people in 57 countries. It has exposure to parametric insurance across multiple sectors and is one of the most active insurance companies in this area. AXA issued catastrophe bonds with a trigger based on the reported windstorm losses of European insurers in 2010 to 2013. AXA Climate (originally launched in 2017 as AXA Global Parametrics) is developing its own expertise in climate risk and aerial imagery as well having underwriting capability. An example of a typical client is a hotel chain in the Gulf of Mexico. If a cyclone greater than category 3 passes within 60 miles of any of the hotels the payout will be $15 million. For other clients, construction risks are covered for penalties arising from delays due to bad weather. The company’s YIELD insurance protects agricultural co-operatives if crop yield drops below the 5-year average. AXA launched a flight delay insurance called Fizzy in 2017, using smart contracts on a blockchain network, but this was withdrawn in 2019.


Solutions Offered MGA, index data, loss reporting tool, capacity

Coverage Type wind, earthquake, freeze, wildfire, hail, flood, motor, life, travel


Arbol

Arbol was set up by former banker and commodities trader Siddhartha Jha to provide weather-related crop cover for farmers and others. The team is using highly localised data sets accessed from IoT sensors and satellites to create bespoke cover at the individual field level. The market in the US for agriculture insurance is limited due to government subsidies but demand globally is significant. The lack of affordable crop insurance, particularly in developing countries, is one of the biggest contributors to the global insurance protection gap. Arbol has partnered with Global Parametrics in 2020 on a pilot project to support Costa Rica coffee farmers.

Founded, Size 2018, small

Solutions Offered distribution, MGA, index data, loss reporting tool

Coverage Type agriculture

https://www.brighttalk.com/webcast/18171/425585?utm_source=brighttalk-portal&utm_medium=web&utm_content=instech%20,%20aon%20&utm_campaign=webcasts-search-results-feed

https://www.brighttalk.com/webcast/18171/438720?utm_source=InsTech+London&utm_medium=brighttalk&utm_campaign=438720


Blink Parametric

Paul Prendergast set up Blink to provide flight cancellation insurance and earlier this year announced the launch of “Blink Parametric”. In 2018 20% of flights were delayed and 2% were cancelled. Blink Travel offers a cash payout or vouchers for hotel stays to customers that missed a flight, all fully automated. Blink has reacted to Covid-19 challenges and is now offering business interruption cover. Blink has partnered with Munich Re Digital partners and additional insurance capacity comes from Generali and Manulife.


Solutions Offered distribution, MGA, index data, loss reporting tool, capacity

Coverage Type travel, domestic appliance, industrial breakdown, business interruption

InsTech London relationship corporate member

CelsiusPro has been structuring and originating weather derivatives and risk management products for over a decade. The team has worked with Aon and advised on parametric covers that include construction projects, pipelines and stadiums and supported the World Bank to provide agriculture insurance to Ukraine. In 2015 CelsiusPro partnered with BlueOrchard to support the Climate Insurance Fund set up by the German Development Bank KfW. The company announced earlier in 2020 that it would be shifting its focus from deal structuring, to providing a platform for creating and monitoring parametric risk transfer triggers for weather risk management market and insurance.


Solutions Offered index data, loss reporting tool, loss reporting agent

Coverage Type agriculture, earthquake, flood, wind

CelsiusPro

Corelogic

CoreLogic is a provider of consumer, financial property information, analytics and services with a division focussed on insurance. The company has acquired and built a portfolio of companies that use and sell public and proprietary data. Corelogic bought catastrophe modelling company Eqecat and hazard data provider Riskmeter in 2013 and has been the modeller on several major catastrophe bonds. In May 2020 Swiss Re announced that it was partnering with Corelogic to provide hail analytics for its US parametric solution.


Solutions Offered loss reporting tool, loss reporting agent, catastrophe modelling

Coverage Type wind, earthquake, hail, wildfire


CRIFF (Caribbean Catastrophe Risk Insurance Facility)

CRIFF was the first multi-country risk pool in the world and has created parametric policies backed by both traditional and capital markets. It was set up by the World Bank and has been supported by countries from around the world including the US, European Union and the UK. Today CRIFF helps Caribbean and Central American governments limit the financial impact of natural hazard events by providing short-term liquidity when a policy is triggered. It is owned, operated, and registered in the Caribbean with 22 members. CRIFF made payouts in June 2020 to the governments of Belize and Guatemala following the triggering of an excess rainfall trigger during tropical cyclones Amanda and Cristobal.


Solutions Offered facility

Coverage Type wind, earthquake, flood, fisheries



Solutions Offered MGA, capacity

Coverage Type agriculture, wind, earthquake, wildfire, drought

InsTech London relationship presented 2019

Descartes Underwriting

Descartes is a Paris based underwriting specialty MGA and is open-minded in what it covers, provided the underwriters get high-quality data. Coverage so far has included property damage, business interruption from natural catastrophes, losses from droughts and excessively high or low temperatures. Descartes has covered industries in areas such as agriculture, mining, construction and renewable energy and it supports banks in protecting their loans and assets. A partnership has been announced between Descartes and insurer Generali’s Global Corporate & Commercial arm with the goal of rolling out parametric insurance to the 160 countries it operates in. Descartes received an additional $18 million of funding in 2020.

FloodFlash

The two founders of FloodFlash started their careers at RMS and discovered parametric insurance when working on the New York MTA bond. The company’s seed funding came from UK investor and incubator Insurtech Gateway three years ago. In the UK, most homeowners get flood protection thanks to the government’s Flood Re initiative, but commercial businesses are excluded. FloodFlash models the flood risk at a high resolution and sells building-specific parametric insurance. They operate as an MGA and sell their insurance cover via brokers. A FloodFlash sensor is attached to the customer’s building and triggers a payment when the water rises to a pre-agreed depth. With hundreds of clients already signed up in the UK, FloodFlash proved its worth after Hurricane Laura hit the country earlier this year, automatically making payments to its affected customers. FloodFlash has recently announced it is expanding its coverage from small businesses to include larger enterprises with multiple locations.


Solutions Offered MGA, index data, loss reporting tool, loss reporting agent

Coverage Type flood



Solutions Offered distribution, index data, loss reporting tool, lossreporting agent, modelling, capacity

Coverage Type agriculture, wind, earthquake, wildfires, drought , flood


Global Parametrics

Global Parametrics was founded by Professor Jerry Skees and is run today by Hector Ibarra formerly of the World Bank and Partner Re. It can model perils and structure parametric solutions anywhere in the world but also supports and seeks out third-party models and data. It provides access to capacity through the Natural Disaster Fund (NDF) which is capitalised by the UK and Germany governments. The company’s mission is that economic resilience to climate change and natural disasters should be available for all. Its customers include multilaterals, corporates, humanitarian agencies, NGOs and microfinance lending organisations such as VisionFund. VisionFund’s ARDIS program provides funds after an event through disaster recovery payments to help get vulnerable communities back on their feet after a flood, drought, or other natural disasters. Global Parametrics welcomes partners that can assist it with distributing and structuring coverage around the world. See sidebar for more details.

https://www.instech.london/podcast/podcast-23-insurtech-mgas-part-two-equipsme-genasys-descartes-underwriting-archipelago-and

https://www.brighttalk.com/webcast/18171/401077?utm_source=brighttalk-portal&utm_medium=web&utm_content=floodflash,%20instech&utm_campaign=webcasts-search-results-feed

https://www.brighttalk.com/webcast/18171/401077?utm_source=brighttalk-portal&utm_medium=web&utm_content=instech,%20global%20parametrics&utm_campaign=webcasts-search-results-feed



Solutions Offered capacity

Coverage Type earthquake, wind, hail, flood, agriculture, wildfire, life


Hannover Re

Hannover Re is in the top 10 global reinsurers and one of the first companies to issue a catastrophe bond almost 20 years ago. This year Hannover has issued a $150 million bond for coverage that includes US wind and earthquake and European wind with the trigger being an industry loss as defined by PCS or PERILS. Hannover Re also announced in December 2019 that it would be providing $50 million in matching capacity to Global Parametrics Natural Disaster Fund (NFD) stating at the time that the company is “convinced that a wide range of partnerships is paramount in order to reduce the protection gap”.

Insurtech Gateway

Insurtech Gateway acts as both an investor and an incubator for early stage companies and is backed by insurance capital investors. Insurtech Gateway is not involved in the structuring of parametric insurance but has been a key enabler of emerging companies such as Jumpstart and Floodflash. The company is actively looking for organisations that can open up new areas of insurance with parametrics being one option as a route to market.


Solutions Offered investment, portfolio companies, capacity

Coverage Type flood, earthquake, motor, cyber

InsTech London relationship corporate member, presented 2019, podcast episode 102

Getting claims paid from traditional insurance cover can take weeks, or even longer after a major catastrophe, but the costs kick in immediately. Californian earthquake insurance is expensive and there are few affordable options to the rather limited state-backed California Earthquake Authority. Kate Stillwell, an engineer and earthquake modeller, started Jumpstart in 2015 with the aim of providing much-needed funds to increase the financial resilience of communities and provide economic stimulus immediately after an earthquake. Jumpstart accesses digital maps released by the USGS (US Geological Survey) and aims to pay claims after 24 hours. The cover is currently limited to $10,000 per person, for residents of California only, and users need to certify, by text, that there has been damage and loss. Jumpstart has been supported by SCOR’s Channel syndicate and Amwins, the wholesale broker.

Jumpstart RecoveryFounded, Size 2015, small

Solutions Offered distribution, index data, loss reporting tool,loss reporting agent

Coverage Type earthquake

InsTech London relationship podcast episode 104

https://www.brighttalk.com/webcast/18171/438906?utm_source=InsTech+London&utm_medium=brighttalk&utm_campaign=438906

https://www.instech.london/podcast/podcast-22-mga-insurtechs-part-one-coverly-tarian-digital-asset-services-artificial

https://www.instech.london/podcast/stephen-brittain-co-founder-insurtech-gateway-secrets-scale-incubation-investment

https://www.instech.london/podcasts


Lloyd’s of London

Lloyd’s of London needs no introduction as an insurance market. Its appetite for unusual risks and exposures from around the world have historically made it the source of some of the most innovative insurance structures. One longstanding parametric type cover is an Industry Loss Warranty (ILW). These are commonly used by Lloyd’s syndicates to protect against large natural catastrophe events such as earthquake and hurricane using the aggregated loss indices from, for example PCS, as the trigger. More recently, Lloyd’s has been leading the way in exploring new uses of parametric insurance and assisting start-ups and scale-ups through the Lloyd’s labs and Product Innovation Facility (PIF). The Lloyd’s Lab provides companies with ten weeks of support from the market, and introductions to underwriters. Ryskex, Parsyl, Praedicat, Metabiota, Parametrix, Blink and FloodFlash have been through the programme. Lloyd’s is working with reputation agency Reptrak as part of a focus on intangible risks and is currently exploring options for Covid-19 related analytics and protections. Lloyd’s is currently looking at providing a non-damage business interruption solution, currently referred to as ReStart for SMEs to help recovery from future pandemic losses.


Solutions Offered capacity, incubation, data

Coverage Type earthquake, wind, flood, hail, cyber, wildfire, terrorism, motor


Liberty Mutual is the third largest property & casualty insurer in the US with a significant presence in the London market. The company has a business unit based in Paris with a focus specifically on worldwide agriculture and parametric business from its Paris office written as treaty and facultative reinsurance. Coverage includes the potential for “non-damage” business interruption (NDBI) an area where there is growing demand. Liberty has committed to participating in public-private partnership projects to support post-disaster emergency relief and help economies rebound.


Solutions Offered capacity, structuring

Coverage Type earthquake, wind, flood, hail, cyber, wildfire, life, terrorism

InsTech London relationship corporate member, presented 2019

Munich Re

Together with Swiss Re, Munich Re has been responsible for some of the largest, most innovative parametric transactions over the last two decades. The second largest reinsurer in the world, Munich has structured over 20 catastrophe bonds including in 2008 a $100 million “excess mortality” bond with a mortality index trigger. In addition to its core reinsurance business it offers solutions for corporates. Cover is provided for risks related to power generation with a focus on renewable energy. Yield index insurance is offered to help farmers manage the risk of crop shortfalls, using an index based on average yields and vegetation data derived from satellite sensors. Munich Re’s clients tend to be large, but it also offers index-based insurance solutions for small-scale farming funded by international donors. The company has recently released “One Cat”, a parametric solution for large corporates and financial institutions covering cyclones (One Storm) and earthquake (One Quake). Munich Re also provides capacity, and helps new companies grow either directly with capacity (for example Super.mx) or via Munich Re Digital Partners.



Coverage Type agriculture, earthquake, wind, flood, hail, cyber, wildfire, energy

InsTech London relationship corporate member; podcast episode 47

Liberty Mutual

https://www.brighttalk.com/webcast/18171/406552?utm_source=brighttalk-portal&utm_medium=web&utm_content=instech,%20lloyds%20of%20london&utm_campaign=webcasts-search-results-feed

https://www.instech.london/podcast/trevor-maynard-head-innovation-lloyds-new-solutions-new-markets-and-future-lloyds

https://www.instech.london/podcast/podcast-38-insurtech-service-part-one-hitachi-munich-re-digital-partners-kasko-shepherd-and

https://www.instech.london/podcast/james-slaughter-chief-underwriting-officer-global-risk-solutions-liberty-mutual


New Paradigm Underwriters

New Paradigm pre-dates the term Insurtech, but as an MGA using new technology in a smart way it is one of the early pioneers in using parametrics for individual locations and small businesses. The company started by offering supplemental US hurricane insurance for businesses that wanted added coverage for exclusions from their conventional policies and today includes storm surge and business interruption. New Paradigm uses an index derived from recorded wind speed as the pay-out trigger. The company is now offering earthquake cover termed “shake and pay”.


Solutions Offered distribution, index data, loss reporting tool, loss reporting agent

Coverage Type earthquake, wind

Nephila Climate is the weather and climate risk-focused business unit of Nephila Capital, one of the largest investors in catastrophe bonds with over $10 billion under management. Acquired by insurance company Markel in 2018, Nephila was behind one of the first weather bonds, Kelvin Ltd in 1999. Today Nephila offers coverage to counterparties in multiple sectors, with a focus on energy markets, renewable energy and agriculture. Nephila has recently announced a partnership with Demex to offer capacity for financial products offering weather-risk protection.

ParsylFounded, Size 2016, small


Coverage Type cargo

InsTech London relationship executive relationship

Parsyl enables customers to track the shipment of perishable goods to ensure they arrive safely at their destination. Despite 90% of the world’s trade being carried by sea, until recently no solution existed to measure and track the potential for failure of refrigeration units in containers. The marine cargo market generates circa $16 billion in premium and losses can be high. The Parsyl technology uses a Trek wireless sensor attached to goods in storage and in transit. Payout is provided based on event triggers. Parsyl was one of the most successful alumni of Lloyd’s Lab cohort one and secured insurance capacity from Lloyd’s syndicates Ascot, Beazley and AXA XL.

PERILS

PERILS publishes an industry exposure and loss database for Europe, UK, Australia, and Canada using data aggregated from insurance companies in these countries. The company is owned by a group of leading European insurers including AXA, Munich Re and Swiss Re and broker Guy Carpenter, giving it access to large volumes of claims data. The PERILS Industry Loss Index Service is provided for use in Industry Loss Warranties or for other parametric covers that use industry loss as a trigger. PERILS provides a complementary service to that provided by Verisk’s PCS in the US.



Coverage Type wildfire, wind, earthquake, flood, hail, volcano

NephilaFounded, Size 1997, medium


Coverage Type earthquake, wind, flood, energy, agriculture


Renaissance Re

One of the earliest, and most successful catastrophe reinsurers to be formed in Bermuda in the nineties, Renaissance Re has always had a strong focus on data and analytics. It has an inhouse Renaissance Re Risk Sciences team monitoring and quantifying global geophysical risks across business segments. From its origins in reinsurance, the company has diversified into insurance. Today it runs the second largest ILS fund with over $9.7 billion assets under management. The company has a long history of investing in innovation, and through its different insurance vehicles, including a Lloyd’s syndicate, is able to support parametric solutions across the entire spectrum.


Solutions Offered capacity, investment




Solutions Offered index data, loss reporting tool, loss reporting agent, modelling



RMS

RMS and AIR have been jostling for position as the leader in providing analytics for catastrophe bonds to the global insurance industry for the last twenty years. The RMS capital markets team has been behind some of the most complex and innovative catastrophe bonds and RMS has been particularly strong in creating well designed parametric triggers. Examples of bonds that RMS has worked on include Golden Goal which provided $262m terrorism cover for FIFA for the 2006 World Cup. It was also the modeller for the first New York Mass Transit Authority (MTA) $200m storm surge bond in 2013 (Verisk’s AIR took this over this role in 2020). RMS owns HWind, a subsidiary providing detailed windspeed records from storms, that is being used as the trigger for Swiss Re’s STORM product.

Qomplx offers tools for data analytics, cybersecurity, insurance, and finance to model, manage, and transfer complex risk. Qomplx Underwriting is currently focussed on providing small businesses with solutions for under-insurance in terrorism and cyber. It launched its first parametric product, WonderCover, in 2020, backed by Lloyd’s insurer Chaucer. Qomplx predicts great potential for parametric products where an objective parameter can be identified. It expects to offer its products to supplement and complement the current indemnification insurance available and for perils where traditional insurance does not provide coverage.

QomplxFounded, Size 2014, small

Solutions Offered MGA, loss reporting agent, modelling

Coverage Type cyber, terrorism


https://www.instech.london/podcast/part-two-insurers-reverse-pitch-allianz-and-renaissance-re

https://www.brighttalk.com/webcast/18171/401077?utm_source=brighttalk-portal&utm_medium=web&utm_content=instech%20,%20qomplx&utm_campaign=webcasts-search-results-feed


Swiss Re joins Munich Re as one of the top two companies providing parametric solutions. It has structured over 80 catastrophe bonds in the last twenty years and is amongst the most innovative companies in this space, using its reach, willingness to invest for the long term and developing its own underwriting tools and data. Parametric coverage includes flight delay and earthquake “shake vouchers” to help cover the immediate costs of an earthquake. In January 2019, Swiss Re launched FLOW, a parametric water-level insurance product designed to protect companies from the financial impact of high or low river water levels. Swiss Re has partnered with RMS to use its HWIND windspeed measurements for its STORM product which offers payout based on the reported intensity of a hurricane as the insured experiences it. The company is partnering with Corelogic to offer its HAIL parametric product for the US. Swiss Re offers its own platform, POP STORM, to provide access to its parametric products to SME companies. The company reached an agreement earlier in 2020 with Tata AIG General Insurance (Tata AIG), for a parametric insurance programme that will provide protection during monsoon season for excess rainfall, with precipitation levels measured by satellite.

Verisk

Verisk subsidiary companies AIR Worldwide and ISO are two of the most active participants providing parametric solutions. AIR provides one of the two most commonly used suites of catastrophe models. The company’s US hurricane model was used for the first major catastrophe bond, issued by USAA, in 1997 providing $400 million of protection. AIR provided the analysis for the WHO pandemic catastrophe bond and in 2020 has been the modelling agent for the re-issue of the New York Metropolitan Transit Authority storm surge bond. ISO’s Property Claim Services (PCS) unit is one of the leading providers of insured property losses from catastrophes in the United States, Puerto Rico, and the U.S. Virgin Islands. Loss data is gathered from insurers and aggregated into a published index which is commonly used as a trigger for Industry Loss Warranties (ILW) or some catastrophe bonds. PCS has been most widely used for tracking natural catastrophe losses but it is expanding into other major losses. In 2017 PCS launched indices for global marine and global cyber. The company is now tracking global onshore property losses of above $500 million for all types of events and includes property damage, business interruption and liability. Based on reported losses, rather than the characteristics of physical events, the PCS indices have a role to play in parametric insurance offerings, but it can take weeks or months after an event for the losses to be reported.


Solutions Offered index data, loss reporting agent, risk modelling, claims

Coverage Type earthquake, wind, flood, hail, cyber, wildfire, life


“One of the biggest challenges is to achieve scale.”


Solutions Offered capacity, structuring

Coverage Type earthquake, wind, flood, hail, cyber, wildfire, life

InsTech London relationship corporate member; presented 2020; interview 2020

Swiss Re

https://www.instech.london/podcast/mark-anquillare-coo-verisk-analytics-making-world-better-safer-and-stronger

https://www.brighttalk.com/webcast/18171/417580?utm_source=brighttalk-portal&utm_medium=web&utm_content=swiss%20re,%20instech&utm_campaign=webcasts-search-results-feed

https://www.instech.london/insight/insights-innovation-swiss-re


Ones to watchAssured Risk Cover

Assured Risk Cover is the company behind StormPeace, providing payments to homeowners within 72 hours if they are affected by a hurricane. The size of the payment varies but is defined by the proximity and strength of the hurricane rather than loss. Alok Jha, CEO and founder of Assured Risk Cover had developed hurricane models for RMS earlier in his career. The company states that it has paid all claims from storms Irma, Michael and Dorian since 2017 and capacity is provided by Topa Insurance.


Solutions Offered distribution, MGA

Coverage Type hurricane


Solutions Offered analytical agent, capacity

Coverage Type health

Bsurance

The concept of hidden or embedded insurance will become more widespread in the future. Bsurance provides the technology to enable insurance to be sold at the point of sale, with insurance capacity being offered by Austrian based UNIQA. One of the company’s partners is PlayBrush which sells toothbrushes The concept of hidden or embedded insurance will become more widespread in the future. Bsurance provides the technology to enable insurance to be sold at the point of sale, with insurance capacity being offered by Austrian based UNIQA. One of the company’s partners is PlayBrush which sells toothbrushes embedded with sensors and connected to an app. The goal is to help children develop better routines for their oral hygiene. Playbrush has partnered with Bsurance to offer dental accident insurance.

Cape Analytics

Cape Analytics uses deep learning and geospatial imagery to provide property intelligence for buildings acrossthe United States. The data collected enables insurers and other property stakeholders to access property attributes at the time of underwriting and now offers a level of resolution equivalent to what would be found for an on-site inspection. In the last couple of years, the company has expanded into assessing wildfire risk. Although not directly involved in parametric insurance yet, Cape Analytics is quickly establishing itself as one of the key leaders in providing location intelligence from aerial imagery, with relationships with leading US insurers. One of the original investors was XL Innovate (now owned by AXA).


Solutions Offered location intelligence

Coverage Type wildfire


Cultovo

Based in Canada, but with a focus on South America, Cultovo is looking to build transparency into the agriculture supply chain. The company analyses imagery from the ground and space to monitor risks such as disease and moisture deficit. It claims an ability to get 90% accuracy in predicting losses. The founders are looking for partners to support their distribution and analytical capabilities.


Solutions Offered analytical agent

Coverage Type agriculture

https://www.instech.london/podcast/ryan-kottenstette-ceo-founder-cape-analytics-geospatial-imagery-and-aerial-insights


Demex

The Demex founders have experience in reinsurance and climate modelling, and the new company announced $4.2 million in seed funding from investors including Anthemis in August 2020. One of the first services to be offered is support for municipalities and Fortune 500 property managers to help with year-to-year snow-removal expenses. Demex is also collaborating with Global Parametrics on the provision of indices.


Solutions Offered forecasting

Coverage Type snow

Founded 1911


Coverage Type wind

Exante

One approach to reducing the effects of disasters that can be forecast, such as hurricanes, is to provide funds in the immediate days or hours before the events occur to help with increasing resilience to the loss. Exante is designing a payout mechanism using near time forecasts of US hurricane severity and landfall. The company is developing relationships with corporations that have employees that could be affected by a hurricane. Payments will be made directly to Exante’s clients’ employees to help them cover the costs of protecting their homes or evacuating from the area.


Solutions Offered distribution, analytical agent, MGA

Coverage Type wind



Solutions Offered indices, analytical agent, modelling

Coverage Type flood


First Insurance Company of Hawaii

JBA

First Insurance Company of Hawaii (FICOH), part of the Tokio Marine Group, launched its parame-tric product FirstTrack for residents of Hawaii earlier this year. Like StormPeace, cover is based on proximity and strength of the hurricane. Payments range from $3,000 - $25,000 and are currently only sold via a broker. This is notable as one of the first homeowner products to be developed in-house by an existing insurer.

Yorkshire based JBA provides flood data and models to help many of the UK’s insurers price flood risk, and is building models around the world. The company has the potential to create an index, act as the analytical agent and perform calibration modelling for parametric structures. It announced a partnership with FloodFlash in 2019.

FirstTrack (First Insurance Company of Hawaii)

https://www.brighttalk.com/webcast/18171/425585?utm_source=brighttalk-portal&utm_medium=web&utm_content=jba,%20instech&utm_campaign=webcasts-search-results-feed


Jupiter is providing predictive data on climate risk and offering resilience analytics across other perils. Unlike the traditional catastrophe modelling companies, which have generally avoided trying to forecast events and relied more on historic records, Jupiter is explicitly offering to help with long term forecasting. Jupiter released ClimateScore in 2020, which aims to predict the future physical risk from flooding, extreme heat, high wind, drought, wildfire, hail, and earthquake for any point on the land surface of the planet. Nephila Capital is one of the investors in Jupiter Intelligence.

Despite the ongoing questions about what is covered as a loss from Covid-19, the world will in future need some kind of insurance protection for pandemics. Metabiota is well positioned to provide modelling assistance and potentially become part of a parametric solution. The company has explored parametrics once before. In 2018, Marsh, Munich Re and Metabiota created PathogenRX, a parametric insurance product designed to protect against the economic impact of infectious disease outbreaks. The product was designed for industries such as hotels and sporting events, but it appears no one purchased the cover. During 2020 Metabiota is participating, remotely from California, in the Lloyd’s Lab to explore potential Covid-19 insurance solutions. Nita Madhav, CEO of Metabiota worked previously for catastrophe modeller AIR, part of Verisk.

MIS offers geospatial intelligence, combining aerial imagery and on the ground insights, including human intelligence. The company has a close relationship with Lloyd’s and has been providing information on loss footprints and other detailed information to help insurance companies with claims assessment for over four years. The company has not revealed any parametric offerings yet, but the breadth of existing relationships, its focus on claims, an increasingly greater resolution of the data and a strong bias towards innovation by founder Forbes McKenzie and his team makes MIS a strong potential partner for parametric providers.

Jupiter Intelligence

Metabiota

McKenzie Intelligence Services (MIS)



Coverage Type flooding, extreme heat, wind, drought, wildfire, hail, earthquake



Coverage Type pandemic


Solutions Offered location intelligence, indices, analytical agent,modelling, claims

Coverage Type flooding, wind, wildfire, hail, earthquake


https://www.instech.london/podcast/forbes-mckenzie-ceo-mckenzie-intelligence-services-data-driven-intelligence


Israel based Parametrix won the Zurich Insurance Innovation Championship in 2020. The company monitors software downtime for major third-party cloud providers such as AWS and others. An index has been created for use in parametric policies and triggers. Cover will be provided for risks such as internet cloud outages, network crashes and other technology-related exposures for SME businesses. Parametrix was part of the Lloyd’s Lab earlier in 2020.

ParametrixFounded, Size 2018, small

Solutions Offered indices, analytical tool

Coverage Type cyber

Praedicat is a science-based data analytics company which identifies litigation risks to help companies select and manage their potential exposure to major risks such as product recall. Praedicat works with insurers and multi-national industrial companies to manage liability exposure by analysing information extracted from the scientific literature on emerging risk and tracking real-time trends. The company has recently been developing pandemic risk scenarios. Praedicat has not yet publicly announced work on a parametric index but with the increasing concerns around intangible risks, and the range of the company’s modelling capabilities, Praedicat would be a natural partner for a company looking to structure parametric covers. It is another alumni of the Lloyd’s Lab in 2020, returning again (digitally) for the recent Covid-19 related cohort.

Praedicat

Reptrak


Solutions Offered indices, analytical tool

Coverage Type product recall, mass tort, litigation, directors & officers



Solutions Offered distribution, indices, analytical tool

Coverage Type reputation risk


Reptrak reviews the social media and public reactions to over 5,000 corporations, in 60 countries. It has already created a reputation index to help companies monitor, and then act, when events occur that impact these companies’ reputations. Reptrak is working with the Lloyd’s innovation team to explore ways to use this index to provide insurance when there is a significant deviation in the index from the norm, as a means of providing an insurance payment to help companies recover from reputation-damaging events. One of the areas of focus for Lloyd’s this year is exploring ways to develop more insurance solutions for intangible assets around the world.

https://www.brighttalk.com/webcast/18171/406552?utm_source=brighttalk-portal&utm_medium=web&utm_content=praedicat,%20instech&utm_campaign=webcasts-search-results-feed

https://www.instech.london/podcast/bob-reville-ceo-praedicat-how-build-liability-model

https://www.brighttalk.com/webcast/18171/428742?utm_source=brighttalk-portal&utm_medium=web&utm_content=reptrak&utm_campaign=webcasts-search-results-feed


Ryskex provides a risk exchange platform for emerging, systemic risks and intangible assets enabling corporate risk managers to purchase protection directly. Founder Marcus Schmalbach worked in industrial insurance for over 15 years before joining the business and chief sales officer Gert Schlossmacher is a former member of the Euler Hermes management board. The company participated in the second cohort of the Lloyd’s Lab, and won the Lloyd’s Lab’s Fusion contest, designed to test early-stage start up ideas aimed at dealing with Covid-19 and other systemic risks. It is currently funded by two family offices in Germany and looking to expand into the US.

RyskexFounded, Size 2018, small

Solutions Offered indices, index data, loss reporting tool

Coverage Type cyber, pandemic, special events


Safehub is offering US companies the chance to gain immediate information about earthquake shake intensity by using sensors attached to buildings and third-party data. It is currently focussed primarily on providing information to engineers for damage assessment. Doug Frazier, one of the co-founders, also co-founded catastrophe modelling company EQE (later Eqecat, subsequently acquired by Corelogic). Co-founder Andy Thomson is a former structural engineer, with a career designing earthquake resistant buildings. It’s early days for Safehub, and currently they are not marketing actively to insurers, but if their sensors become widely deployed the potential exists to use the data for highly localised parametric insurance based on earthquake shake intensity and peak ground acceleration.


Solutions Offered indices, sensors


Safehub

Skyline

The founders of Skyline, Gethin Jones and Laurent Sabatie, previously worked for leading insurers. Skyline Partners focus solely on index-based parametric insurance underwritten by global reinsurers. Skyline has developed its own index platform "INSDEX" and aggregates high resolution data obtained from multiple sources. The company partners with Geosys to collect data for the agriculture sector. Additional areas of focus are renewable energy (including solar), agriculture and natural catastrophes. Sklyine were part of the Lloyd's Lab and during that time has been exploring the use of parametrics for new lines of business. Skyline has demonstrated its ability to combine technical capabilities with insurance and data partnerships, and looks likely to continue to grow in the next few years.


Solutions Offered index data, loss reporting tool, loss reporting agent, MGA

Coverage Type flood, drought, agriculture, renewable energy


https://www.brighttalk.com/webcast/18171/403760?utm_source=brighttalk-portal&utm_medium=web&utm_content=ryskex&utm_campaign=webcasts-search-results-feed

https://www.brighttalk.com/webcast/18171/417580?utm_source=brighttalk-portal&utm_medium=web&utm_content=skyline&utm_campaign=webcasts-search-results-feed


The founders of Mexico based Super.mx (formerly Super Seguros) have experience of structuring catastrophe bonds for the Mexican government and worked on the CRIFF facility. They have close links to the highly regarded local earthquake modelling company ERN. Mexico has a long history of devastating earthquakes, but traditional insurance has struggled to meet the needs of insurers buyers, who want clear definitions of what is covered and fast settlement. Super.mx claims to be the first digital MGA in Mexico, backed by Munich Re, and is focused on designing and distributing simple, “no adjuster” insurance. The company began selling its first product, parametric earthquake insurance, for Mexico City, in March 2020.

Super.mx

Setoo

Speedwell


Solutions Offered distribution, MGA, capacity, indices



Solutions Offered distribution, MGA, capacity, indices

Coverage Type travel

Setoo is building the technology to enable online businesses to develop tailor-made protection products that can be automatically embedded into the purchase. Similar to Blink, this approach of offering a “white label” solution to third-party distributors, such as retailers, helps solve the problem of how to scale a parametric product. Potential solutions include flight cancellation or compensation for lack of snow for skiing holidays. The company has been supported by AXA Next Lab through Kamet and has received $12 million of funding.

Speedwell Weather provides weather data, forecasts, software, and consultancy to weather risk, energy and agriculture. Its products include SuperPack which provides world-wide weather data sets. Speedwell Weather is the settlement agent for some parametric weather-risk contracts.


Solutions Offered indices, forecast

Coverage Type wind

InsTech London relationship executive relationship

Springboard has created PedBox, a device that measures pedestrian footfall along streets or to track customers entering stores. It is exploring creating insights from public sources of CCTV data in the UK, Europe and North America. With interest increasing in the use of PedBox as a tool to measure (and control) customers entering shops during 2020 as part of Covid-19 precautions, the data being collected by the company has the potential to be used to provide indices to structure parametric covers for business disruption. Whilst the impact of the pandemic is the biggest concern for retailers just now, terrorism or bad weather have had notable impacts on retailers’ profits in the past. Not known to be part of a parametric solution at this time.

SpringboardFounded, Size 2002, small

Solutions Offered indices

Coverage Type business interruption


Pricing volatility is one of the biggest risks to farmers and the food industry. With the help of Harvard, Liverpool and Lisbon Universities, founder and former farmer Richard Counsell has developed a platform to trigger payment to cover shortfalls in the price of agricultural products. The Stable platform, backed by global reinsurers, and part of the Anthemis portfolio, is now offering protection for its clients using over 3,000 untraded commodity indexes from 70 countries.

StableFounded, Size 2019, small

Solutions Offered indices

Coverage Type pricing volatility


Understory currently serves two market segments. Motor dealers get protection against hail loss and vineyard owners are covered for hail and freeze. The company uses its Dot weather sensors to map the occurrence of hail and frost. Protection is sold via an app and payouts are made within 3 weeks.

Understory

Wetterheld

WorldCover


Solutions Offered indices, sensors, distribution

Coverage Type wind, hail, freeze


Solutions Offered drought, snow, rain

Coverage Type analytical agent


Solutions Offered drought, snow, rain, agriculture

Coverage Type distribution, analytical agent

Based in Germany and backed by Element insurance Wetterheld is offering cover to small businesses. Farmers can buy protection against drought, and event organisers get coverage for rain. It’s early days for the company but with the support of Astorya.VC as one of its investors, and with a growing interest in agriculture focussed parametric offerings, expect to hear more from this company soon.

The company was founded on the basis of social entrepreneurship, financial inclusion, micro finance, and impact investing. Based in New York, the initial focus has been on selling crop insurance to smallholder farmers in Ghana with pilots elsewhere in Africa. WorldCover uses an innovative form of peer to peer funding to provide some of the capacity for its insurance. It has sold parametric insurance to more than 30,000 customers but pivoted from using its own salesforce to selling via partners. The company has raised $6 million in investment from funds such as Y Combinator and Japanese insurance group MS & AD to build the business and expand to other countries.

https://www.brighttalk.com/webcast/18171/438720?utm_source=brighttalk-portal&utm_medium=web&utm_content=stable,%20instech&utm_campaign=webcasts-search-results-feed


VanderSat provides data to insurers and agricultural industries on drought and water usage. CEO Thijs van Leeuwen has a career in researching satellite-based climate products. VanderSat works with Swiss Re as a data provider for its drought index and the reinsurer’s Opti-Crop application. The company also supports AXA and Descartes Underwriting.

VanderSatFounded, Size 2015, small


Coverage Type drought, agriculture

www.instech.london


Documents

Parametric Insurance...recommendations beyond general observations of trends and themes. The reproduction of all or part of this report without the written permission of InsTech London