Kalista launches multi-peril crop industry loss warranty (ILW) products

Kalista Global the Bermuda headquartered insurance and reinsurance services firm focusing on the insurance-linked securities (ILS), catastrophe bond, parametric re/insurance and alternative reinsurance sectors, has launched another new product today. Hot on the heels of the launch of an index-based ENSO (El Nino) cover the firm has announced the launch of a range of multi-peril crop industry loss warranty (ILW) products.

Kalista is again partnering with Bermuda based brokerage New-Grange to offer a suite of ILW products which aim to provide multi-peril crop protection. The target market is broad, with the announcement saying that Kalista is targeting the “U.S. and International Multi-Peril Crop Insurance (MPCI) Retrocessional Reinsurance market.” We assume that the product will be available as reinsurance protection for MPCI participating insurers as well as offering retrocessional protection for those firms already reinsuring the crop market globally.

Kalista says the products will provide both yield and revenue protection and the firm will use the AIR Worldwide Multi-Peril Crop Insurance Model and Agricultural Weather Index for modelling the ILW’s. The AIR crop model uses data on weather patterns and crop yields alongside crop phenology, or growing models. Kalista says this will provide clients or sponsors with a better understanding of how crops react to related regional agro-meteorological conditions, both in the U.S. and globally.

Kalista says that the indexed approach to payout for these ILW’s is superior to an actuarial analysis of historical data as it provides a clear and objective means of measuring losses. The index based trigger that the ILW’s will use means there is no need for a loss assessment and should also mean that payouts can be made more promptly after an event.

Spencer Conway, Executive Vice President of Kalista commented on the new product launch; “The launch of this suite of Crop ILW products, a month after we released our “EPC”, or “ENSO-based Parametric Cover, comes at an exciting time in Kalista’s expansion.  In response to express client demand, the evolution of our ILS/W structuring capabilities into more innovative streams of business, is helping provide our Sponsors with additional flexibility to securitize and diversify their risk.  It is also helping drive our risk transfer solutions to become a sustainable complement to traditional reinsurance and retrocessional reinsurance.”

Hugh OʼDonnell of Bermuda-based New Grange Brokers added; “This latest product release further reinforces the drive and enthusiasm Kalista has for the continued evolution of ILS/W product development, a vision that New Grange is proud to be a part of.”

It’s another interesting product launch from Kalista and an index triggered crop loss warranty fits nicely alongside its parametric re/insurance solutions and El Nino product it had announced previously.