AXA Climate, the parametric specialist risk transfer managing general agent (MGA) unit of global insurance and reinsurance company AXA, has selected the HWind product from risk modeller RMS to use as a trigger data provider for parametric insurance policies.
RMS launched a suite of hurricane forecasting products for the North Atlantic powered by RMS HWind back in 2019 and the tool has become widely used in the insurance, reinsurance and ILS sectors.
HWind offers users an ensemble of forecast tracks, track and gust probability metrics, as well as individual wind hazard and corresponding loss scenario footprints covering the following five days.
The product provides insurance, reinsurance and insurance-linked securities (ILS) markets’ with detailed insights throughout a hurricane’s life cycle.
HWind also provides users a tool that can be used to understand the potential portfolio losses a hurricane could bring, and so inform choices on trading of positions, such as catastrophe bonds, or purchase of last-minute hedging capacity, such as industry loss warranties (ILW’s).
Way back in 2015 we explained that the HWind product had been used for the development of triggers for parametric insurance and reinsurance products leveraging its real-time hurricane exposure capabilities.
HWind’s real-time data sets for tropical cyclones can be used for quick evaluation of hurricane trigger / payout conditions, allowing parametric policyholders to gain rapid access to capital following impactful events.
RMS’s HWind product is available over the Western North Atlantic, Eastern Pacific, and Central Pacific basins, but AXA Climate will only be using it for US wind parametric triggers to begin.
AXA Climate will be able to structure parametric policies anywhere using HWind, offering its clients the protection they paid for when damaging winds are present.
Amaury Dufetel, Head of Insurance, AXA Climate, commented, “At AXA Climate, we believe the preciseness of sophisticated real-time data is essential to improve the use and uptake of parametric insurance solutions.
“Data coming from independent reputable organizations like RMS HWind solutions, developed over more than 25 years by one of the world’s leading hurricane observation researchers, will allow us to structure innovative parametric covers and bring to our clients the best tailormade Tropical Cyclone coverage both in terms of price and claim settlement.”
Charlotte Acton, Senior Director, RMS, also said, “By working closely with AXA Climate, we have been able to help an important client develop innovative products that offer a competitive advantage and can help enable growth into new markets.
“Parametric insurance is another example of how the insurance industry can help build resilience into economies, which in turn helps reduce the protection gap. RMS remains committed to supporting insurance innovation, in our products, for our clients, and for their end users.”