Arbol, a technology-led underwriter of parametric risk transfer, climate and weather insurance or reinsurance business, has paid out $10 million for a parametric reinsurance contract that was triggered by hurricane Ian for its client Centauri Insurance.
Impressively and demonstrating the value of parametric risk transfer, at the insurance or reinsurance level, Arbol made the payout for this contract on October 21st, just three weeks after Hurricane Ian’s onslaught in Florida.
As a result, Arbol notes this was likely one of the first insurance market payouts for loss or damage attributed to Hurricane Ian.
Centauri Insurance is a property and casualty insurer operating in nine U.S. states and the carrier had purchased a fully collateralized parametric reinsurance solution developed by Arbol.
The product pays out based on predefined, objective parameters, with the parametric loss calculated at individual policy location level and the payout based on a reinsurance layer protecting the entire portfolio for Centauri.
“The parametric reinsurance product enables claims to be settled rapidly, months or sometimes even years faster than the rest of the industry,” explained Sid Jha, Arbol Founder and CEO. “Because these policies pay out on objective data triggers, we can bring much needed efficiency and transparency to the insurance and reinsurance sectors while providing essential financial relief in the wake of a climate disaster like Hurricane Ian. Parametric solutions allow for claims to be settled rapidly and transparently, which is ideal for helping businesses in states like Florida with outsized risk exposure to hurricanes and enables long-term financial resilience.”
“During recent years, back-to-back storm seasons have battle tested insurers in our region and changed the landscape of our insurance industry,” added Ricardo Espino, CEO of Centauri Insurance. “As insurers, we have to start thinking outside the box and seek innovative solutions for mitigating risk. Partnering with a cutting-edge company like Arbol, has given Centauri the ability to process claims faster in the aftermath of Hurricane Ian by utilizing real climate data and state-of-the-art technology.”
The collateralized parametric reinsurance policy utilises location-level payouts, with these determined based on the distance of each location from a particular hurricane track, as well as the maximum sustained wind speed captured along the hurricane track.
The data and calculation mechanism are pre-agreed before the contract begins, making for a transparent process and it uses National Hurricane Center data provided by dClimate, Arbol’s exclusive data partner.