Insurance and reinsurance broking group Howden has partnered with Everbridge Inc., a provider of event management and warning solutions, to work together with a goal of making parametric risk transfer more useful, speeding payouts and integrating insurance capital into disaster resilience and relief.
It’s the latest announcement of a partnership that aims to make insurance risk transfer a far more integrated proposition into disaster response, to the benefit of organisations from governments, to nongovernmental organizations (NGOs) and charities.
As these entities looks to address climate risk and raise resilience, they are already implementing early warning systems technology, systems to aid in response and recovery, as well as public alerts.
This is the kind of proposition that Everbridge brings to the table, into which Howden wants to also dovetail insurance risk transfer using parametric triggers.
The companies explain, “By bringing together Everbridge technology with Howden’s insurance expertise, response and recovery organizations are equipped to manage the entire lifecycle of a catastrophic event. Everbridge technology supports the preparation for and response to an event, while parametric insurance policies deploy much needed capital to the emergency response effort in the event of a major catastrophe. This creates a mechanism to move capital from where it is traditionally deployed, in the relief phase, into the emergency response phase of the critical event, helping to save more lives and reduce property damage before it happens.”
“When a major natural disaster occurs, emergency response teams need access to funds quickly and reliably,” Charlie Langdale, Head of Climate Risk and Resilience at Howden commented. “Having pre-arranged finance in place enables those delivering the disaster response to get aid to those who need it, when they need it. Because payment is based on pre-determined triggers, validated by third-party data, parametric policies can pay out almost immediately upon the agreed parameters being hit. Whilst Everbridge’s public warning systems mobilize the people needed to respond to disasters, parametric insurance can mobilize the capital to fund the response. This brings together two critical components of resilience to help those responsible for preventing loss of lives and livelihoods by facilitating a faster, more structured response.”
“While Everbridge technology helps our customers prepare for and manage critical events, a major catastrophe requires capital to fuel the emergency response,” added Dominic Jones, Senior Vice President of Partnerships & Alliances at Everbridge. “We partner with Howden as they continue to push the industry to look at new innovative ways for customers to address an increasing threat landscape from extreme climate-related disruptions. Together, Everbridge and Howden are providing differentiated solutions for mitigating climate risk and maximizing resilience by using technology and insurance-based capital solutions to help shorten the period of time between a major event occurring and people receiving the funds.”
The idea is to use Everbridge technology to power a workflow, featuring data collection, communications and coordination of the emergency response.
Those entities seeking protection will be able to deploy insurance capital or assets purchased quickly and more effectively, it is hoped, maximising the impact of relief efforts and funding and augmenting them with parametric insurance payouts upfront and at the right time that they can make the most impact.
Because that’s what this is really all about. Bringing the right risk transfer product, to customers in the right form, at the right price, and designed to deploy capital at the right time when it can be most effective.
Hence, integrating parametric insurance alongside emergency technology, from alerts, to warnings, to disaster event management systems, could in future enable more rapid payouts and more useful deployment of insurance proceeds, ultimately creating a more responsive risk transfer and resilience product-set.
It’s a little similar to the goals of the African Risk Capacity (ARC), in looking to integrate its parametric climate disaster insurance products with other contingent financing related to food security, that we wrote about earlier today.
Both initiatives aim to provide a more holistic and responsive risk financing solution, that is better integrated with resilience and response.