Communities experience climate disasters together

After a hurricane or a flood, many people in the same area face similar immediate costs.? More and more, parametric covers are being deployed at a community level to provide collective protection.

While parametric insurance is often associated with large corporations or national governments, an increasing number of cities are considering parametric covers to help people in small communities or densely populated areas recover more quickly from events such as floods.

Payouts made to city governments or community organisations may be distributed directly to those affected, or used to fund emergency response operations and repair critical infrastructure.

The city of Isleton in California is set to purchase a $2.5mn FloodFlash policy for its community-based insurance program, Parametric Insurer can reveal today, after reporting earlier this month that the municipality was considering a proposal for sensor-based parametric coverage.

The proposed policy is underwritten by Munich Re, which is also working on a new parametric insurance pilot to protect cities in the Mississippi River Corridor against flooding.

Meanwhile, two parametric flood insurance initiatives for southwest Virginia have been awarded funding by the state’s Department of Housing and Community Development. Floodbase and Raincoat have received one grant and Ric Platform Services has received the other.

Ric was previously awarded a grant to work on community-based parametric flood insurance in Hampton Roads, Virginia, while Floodbase and Amwins have bound parametric policies protecting California municipalities against atmospheric river flooding.

New York City already has a community-based flood insurance program with Guy Carpenter and Swiss Re, while California’s Ocean Protection Council recently awarded a grant to the city of Imperial Beach to develop strategies to address coastal flooding and consider parametric insurance.

And it is not just the US where cities are turning to parametric insurance for flood risk. Allianz, Swiss Re and flood risk management firm HKV have developed parametric excess rainfall and flood extent products for Ghana’s capital Accra as part of an Insurance Development Forum project.

The country’s government has been invited to apply for premium financing from the InsuResilience Solutions Fund to enable the coverage to go live.

COP29 and sovereign risk transfer

With a growing number of risk transfer initiatives across the continent, the African Union called on the African Risk Capacity and World Food Programme earlier this year to work together with its development agency on a unified approach to disaster risk management.

Last week at the COP29 climate conference, they launched the Africa Disaster Risk Management and Recovery Platform , which will act as a forum to bring together various groups to promote disaster risk management, harmonise recovery efforts and pool resources.

New funding for Pacific disaster risk pool PCRIC was also announced at COP29, with the UK government pledging ￡5.3mn ($6.7mn) and the Global Shield Solutions Platform providing €2.5mn ($2.6mn).

Before COP29, The Insurer spoke to the executive director of Seadrif , who said a priority for Southeast Asia’s risk pool is to support the growth of public asset insurance programs in countries such as the Philippines and Indonesia.

Recent payouts

The government of Panama expects to receive a $26.7mn payout on its excess rainfall insurance policy from CCRIF SPC following flooding earlier this month.

The United Nations Children’s Fund (Unicef) plans to scale up its WTW-designed parametric risk transfer scheme after $4mn in payouts were made in the first year of its pilot to support vulnerable families in Africa, Asia and the Pacific.

The US Department of Agriculture is paying more than $143mn in parametric insurance claims to agricultural producers in Florida affected by Hurricane Milton.

New launches

ILS investment manager Twelve Capital is preparing to launch a fund dedicated to parametric risk transfer, its ILS senior advisor Rom Aviv revealed at the Weather Risk Management Association (WRMA) conference in London.

MGA Parametrix has launched a new parametric cyber product, Parametrix Enterprise Solutions, covering any loss caused by internal or external system interruption.

Highlights from Parametric Insurer

If you haven’t already read the November edition of Parametric Insurer, here are just a few of the highlights.

NormanMax Insurance Solutions has expanded its offering beyond commercial insurance and reinsurance to offer a parametric hurricane product for US consumers, Parametric Insurer revealed.

Laurence Eeckman, board member of the Federation of European Risk Management Associations (Ferma), told the publication why she believes there is a “perfect opportunity” now for parametric solutions to be used more widely by corporations.

Howden’s Rowan Douglas predicted at the Parametric Insurer Conference 2024 that one contributor to the growth of parametric solutions in the next five years would be a wider adoption of physical climate risk quantification by financial institutions.

Subscribers to The Insurer can download the full issue here . If you don’t have an active subscription and would like full access, contact our team .

Partnerships

The French space agency CNES is providing financial support to a project from Descartes Underwriting and public research lab SERTIT to use earth observation data to assess damage after natural disasters.

Descartes’ underwriting manager Alessandro Girelli had recently told the WRMA conference that using satellite imagery to assess tornado damage to solar farms can enable parametric covers with lower basis risk than those using the Enhanced Fujita scale.

Protect Group, which provides travel service providers with ancillary products, has partnered with Blink Parametric to offer parametric travel disruption solutions.

People moves and acquisitions

Blink Parametric’s parent company CPP Group has added Miller’s head of parametrics Alice Glenister as a non-executive director, as CPP focuses on developing its parametric products.

Parametric Insurer revealed that Tokio Marine HCC’s new parametric weather (re)insurance team includes Arbol’s Scott Klemm and Mitiga’s Obbe Tuinenberg, who join former colleagues Kit Muir and Hector Ibarra.

Everest Re has appointed Emily Davis head of global specialties, replacing Phil Taylor in a role that encompasses responsibility for parametric solutions alongside aviation, marine, cyber and engineering.

Environmental measurement firm Vaisala has completed its acquisition of Speedwell Climate , a provider of data and software for parametric weather risk transfer.

Hub International has acquired Canada-based Global Ag Risk Solutions, including its parametrics.ag brand.

Elsewhere in ART

Turning to the broader category of alternative risk transfer, Swiss Re Corporate Solutions’ CEO Ivan Gonzalez has told The Insurer that the company aims to strengthen its ART offering, seeing it as an area of growth.

Scor is also expanding its structured solutions offering for life and health specifically, as it looks to improve its mix of new business as part of a remedial L&H strategy.

Meanwhile, the London market welcomed the announcement that HM Treasury would consult on a UK regime for captive insurance companies in a bid to boost the country’s competitiveness.

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