Descartes Underwriting launched as parametric, data-driven MGA

Descartes Underwriting has been launched as a start-up insurance technology (insurtech) managing general agency (MGA) with a focus on parametric and data-driven risk transfer products and an ambition to utilise the ILS market as a source of capacity.

Launching Descartes Underwriting is Chief Executive Officer (CEO) Tanguy Touffut, who was previously CEO of AXA Global Parametrics, the parametric and index-driven risk transfer specialist unit of the global insurance and reinsurance firm.

He’s also joined by Sebastien Piguet as an Executive Director at the new firm, a former AXA Global Parametrics employee as well and an experienced data scientist.

Descartes Underwriting has raised EUR 2 million in venture capital from BlackFin Capital Partners, an investor with almost EUR 1 billion under management across financial services private equity and technology focused venture funding through its BlackFin Tech fund, which is where this investment came from.

The company will operate as a business to business insurtech acting as an MGA, working with brokers to structure innovative and data-driven insurance and reinsurance solutions, underwriting them on behalf of tier-one reinsurers and also insurance-linked securities (ILS) funds.

Being data-driven in their mission, you can imagine that Descartes is going to have a considerable focus on the parametric risk transfer product and also stretching the realms of what is possible utilising parametric triggers, indices and data-driven triggers for risk transfer.

“We strongly believe that new technologies are deeply changing the insurance sector and we want to be part of this transformation journey,” CEO Tanguy Touffut explained.

He said that Descartes Underwriting will follow a strategy focused on three priorities.

First, desiging insurance, reinsurance and risk transfer products with simplicity in mind, focusing on fair pricing, immediate claims payment and business or personal insurance solutions that are fit for the digital age.

Second, looking at risk with a fresh pair of eyes and challenging long-held beliefs and the status quo, aiming to be a lean operator that delivers superior value to its customers, through specialisation and a keen focus on what matters to its clients.

Thirdly, Descartes Underwriting aims to build lasting relationships with brokers, insurance and reinsurance firms, as well as ILS funds, which it believes is key to offering best of breed products and ensuring satisfaction on all sides.

“Corporate and commercial insurance is not a zero-sum game, everybody should win,” Touffut said.

At its heart though is technology and putting that to work to design better insurance and risk transfer solutions, many of which are likely to prove ton be parametric or data-driven in some way.

Descartes Underwriting will look to utilise data inputs from technology related to the Internet of Things (IoT), from its clients, from remote sensing technologies (such as Sentinel satellite data) or from third parties, while putting to work cutting edge solutions that leverage artificial intelligence and machine learning techniques as well.

The funding it has received will be utilised to enhance the risk models and data algorithms that Descartes is building to support its underwriting, as well as to secure access to new sources of data and build out its team. The firm targets hiring ten people in 2019, including engineers, data scientists, actuaries and business development specialists.

The company is looking to underwrite many types of risk, including natural catastrophe and weather related business interruption, a burgeoning area of the market. But Descartes said it will look at any lines of property and casualty risk, as long as there is suitable data available to leverage in underwriting and trigger development.

Working with technology and data-driven underwriting MGA’s could prove very attractive for ILS funds, particularly those who perhaps do not have the resources to look at the types of complex risk this could include themselves, but who have the capacity and the appetite to back them.