Descartes unveils parametric product to protect US solar farms against tornado damage

Descartes Underwriting, a data-driven risk transfer specialist managing general agency (MGA) and insurer with a parametric focus, has launched what it calls the world’s most advanced parametric insurance product to protect utility-scale solar farms in the United States against damage from tornadoes.

According to the announcement, the coverage deploys satellite data and analytics to insure transition-sector investments against physical damage, business interruption, as well as other intangible impacts of tornadoes,

Descartes noted that this eliminates claims ambiguity and greatly reduces the risk of discrepancies between payouts made and actual losses.

Moreover, the parametric policy protects ground-based photovoltaic solar farms in the US with generation capacity greater than 10MW.

The MGA has confirmed that payouts from the policy will be calculated when an identified tornado enters the mapped surface area of the insured windfarm, and causes any damage to panels, as identified by “very high-resolution satellite imaging.”

Importantly, Descartes noted that the percentage paid of the pre-agreed limit, which can be up to $70 million, will match the percentage of the surface area damaged.

“For example, if the National Oceanic and Atmospheric Administration (NOAA) identified a tornado as having crossed the site of a solar farm insured under a $50 million policy, and satellite images show that panels on 15% of the site suffered damage, the insured would receive a payout of $7.5 million, or 15% of the limit within weeks of the event occurrence,” the company said.

“Parametric tornado policy indexes are usually based on windspeed estimates. This product, developed by Descartes’ R&D team, reduces the basis risk by leveraging state-of-the-art technology. It combines the accuracy of on-site assessment with the parametric benefits of swift, transparent claims payments. It is the next generation of parametric insurance products,” commented Descartes Chief Insurance Officer and Co-Founder Sébastien Piguet.

“Advances in data and computing power allow us to abandon traditional ways of doing insurance. In their place, we continue to develop new solutions that protect society from the effects of climate change. With this new tornado product, we can protect investments in the energy transition from the relentlessly rising number of Severe Convective Storms, which inflict debilitating damage on solar panels,” added Tanguy Touffut, Co-Founder and CEO of Descartes.

Descartes and real-time flood forecasting tech firm Previsico, recently teamed up to deliver a flood insurance product for UK commercial firms that features a trigger based on sensor data, warnings and forecasts of water depths.

Descartes CEO Tanguy Touffut will be a speaker at our upcoming ILS NYC 2025 conference, where he will join a panel to discuss insurance-linked securities (ILS) investment opportunities in parametric risk.