Descartes Underwriting, the Paris-based parametric insurtech, has formed a partnership with Reask, the tropical-cyclone modeling firm.
The partnership aims to expand the availability and advancement of parametric cyclone insurance products by combining Descartes’ ability to incorporate new technology into parametric insurance product design with wind data provided by Sydney-headquartered insurtech Reask.
This partnership also seeks to address the insurance protection gap by expanding global cyclone parametric coverage, Descartes said, explaining that the consistent global coverage of Reask’s tropical cyclone product, Metryc, enables the expansion of parametric insurance policies into regions and geographies where data limitations impeded previous coverage.
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Furthermore, Reask’s ability to augment scarcely available ground-level observations and deliver high-resolution wind hazard intensity metrics within days following an event greatly supports the deployment of Descartes’ parametric products.
As natural catastrophe and extreme weather risks evolve due to climate change, the inherent difficulties in obtaining accurate data due to the destructive nature of cyclone activity are also likely to be accentuated. The partnership between Descartes Underwriting and Reask aims to address these challenges as the scientific teams at both organizations collaborate and apply machine learning to improve tropical cyclone wind field and terrain interaction models
Descartes recently raised $120 million to expand its parametric product offering. Further, Descartes Underwriting has worked in collaboration with Generali Global Corporate & Commercial since 2020 to improve corporate uptake of parametric risk transfer solutions globally.
Named windstorms pose a major threat to businesses, communities and public entities in coastal megacities, deltas, and islands, said the company. For example, in the last year alone, cyclone-driven economic loss is estimated to have reached US$78 billion worldwide, with 68% of losses (US$53 billion) not covered by insurance. Even in the more established North American market, Hurricane Ida, which carried an economic impact of an estimated $95 billion USD, illustrates the windstorm coverage gap, with only $30 billion or 32% of losses insured, Descartes explained.
“Data dearth in certain regions remains a gating factor to providing parametric insurance covers that enhance resilience. Reask leads the charge in its ability to quickly capture a windstorm event or provide wind at location maps in certain areas, such as the South Pacific, where data is less accessible,” said Kevin Dedieu, co-founder & head of R&D at Descartes Underwriting.
“Precise, high quality data is a prerequisite to all parametric insurance structures. Wind-at-location data, such as that provided by Reask, amplifies customization and reduces basis risk in game changing ways that serve to benefit parametric insurance providers, brokers, reinsurers, and risk managers for public entities and private sector clients worldwide,” he continued.
“Our Metryc solution enables the transfer of financial risk in all corners of the globe, expanding the reach of parametric insurance solutions such as those provided by Descartes Underwriting,” commented Thomas Loridan, co-founder and CEO at Reask. “It is thanks to our machine learning approach to wind modelling that Metryc can be used as a reliable third-party view of tropical cyclone wind speed data even in regions where observations are scarce.”
About Descartes Underwriting
Offering a new generation of technology-driven parametric insurance, Descartes collaborates with brokers to protect their corporate and public sector clients against the full spectrum of natural catastrophe and extreme weather exposures, including named windstorms. Descartes’ covers are designed to supplement gaps left by traditional insurance, providing cost-effective and fully transparent products that guarantee liquidity via swift and direct payout. Born out of the conviction that climate change calls for a revolutionary approach to insurance, Descartes is a managing general agent, backed by a panel of tier-one risk carriers and can provide US$200 million per policy. Headquartered in Paris, Descartes Underwriting also has offices in Singapore, Sydney, New York, Houston, and London.
Source: Descartes
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