Descartes Underwriting, the insurance technology (insurtech) focused managing general agency (MGA) that specialises in parametric and data-driven risk transfer products, has announced a partnership focused on developing better parametric flood insurance triggers with satellite data firm ICEYE.
Parametric flood insurance, reinsurance and risk transfer has been available for over a decade, but triggers used for flood coverage have ranged from rudimentary, to complex and perhaps unreliable.
As we’ve explained numerous times going back as far as 2012, for a flood parametric trigger to be reliable it either needs to involve flood depth sensors in situ where the risk is, or through the use of satellite and sensing data to measure flood extent and coverage, which are likely still the two best methods for constructing parametric triggers for flood risk transfer.
Descartes aims to leverage its tech-focused ability to develop parametric risk transfer products along with ICEYE’s satellite derived flood date, to develop new parametric flood insurance offerings.
Descartes expects that ICEYE’s data will enable it to construct precise parametric triggers for a larger global client-base, with rapid claims payments made based on exact client locations within a flood event.
ICEYE has a growing constellation of synthetic aperture radar satellites, with its Flood Monitoring Solution offering the insurance and reinsurance industry a near real-time flood extent and depth data product, with resolution at the specific building level, with reports available within 24 hours of a flood event.
It provides global coverage which Descartes hopes will allow for the expansion of parametric insurance and risk transfer options into regions and geographies where data limitations impeded previous coverage.
Sebastian Piguet, Co-founder & Head of Underwriting at Descartes Underwriting commented, “We consider access to accurate data, provided by an independent third party, to be a prerequisite for all parametric insurance contracts. We are thus delighted to partner with ICEYE to advance the frontier of parametric flood insurance and expand our offering to a wider geographic client-base based on ICEYE’s data.”
Lisa Wardlaw, Global Head of Insurance Solutions at ICEYE added, “The climate crisis calls for a revolutionary approach to insurance that fuses science, data and finance. We are proud to partner with Descartes, a company that shares our commitment to innovation. Our unique global flood monitoring solutions consistently provide data on whether a given parameter has been met or exceeded at any location worldwide. By reporting on such activity quickly and effectively, ICEYE is enabling flood monitoring that has been impossible until now.”
This year’s major flood losses in Europe have driven home the potential costs of flood catastrophes, with significant losses being borne by the insurance and reinsurance industry, but also a significant amount of the financial costs not covered by insurance.
Parametric triggers can enable more responsive flood risk transfer and can also help to narrow the protection gap related to flood risks, by allowing businesses and homeowners to cover more of their exposure, while the global nature of satellite data can help to make flood insurance available more broadly around the world.