ICEYE, a provider of satellite data and services to inform decision-making and analysis, has announced that its satellite data and imagery will be explored to provide the inputs to support the parametric insurance trigger for a recently announced UNDP backed project in Ghana.
Our sister publication Reinsurance News reported in June that insurance firm Allianz and global reinsurance company Swiss Re are providing the risk capital to back a tripartite parametric flood insurance program in Ghana.
The Insurance Development Forum (IDF) is working with the Ghana Ministry of Finance, the United Nations Development Programme (UNDP) and the German Government to develop the parametric flood insurance program for the country, with Greater Accra Metropolitan Area the first target implementation.
Now, ICEYE has revealed that its satellites and the data or imagery it sources from them, will be explored as possible inputs to the parametric flood insurance triggers in Ghana.
It’s notable as satellite based parametric triggers, while having been seen as a good idea for well over a decade (we’ve been writing about their potential for far longer than that), are only now coming into their own, with many more satellites in the sky and their output being of a far greater resolution than before.
ICEYE is set to provide high-resolution hazard data in the event of a flood occurring and being considered a potentially qualifying event for the Ghana flood insurance parametric trigger.
ICEYE will combine its SAR (Synthetic Aperture Radar) imagery with data from other unnamed sources, and will then verify both the extent and depth of any flooding that occurs.
Presumably, the parametric trigger is therefore based on flood extent or depth, or a combination of the two.
The beauty of a satellite sensing or imagery approach to flood extent visuals and measurements, and its application to parametric insurance, is that it can be used practically anywhere in the world, with satellite coverage now global and improving all of the time.
Having a global coverage satellite data provider that the insurance, reinsurance and indeed ILS industry can broadly accept as a third-party calculation and verification agent for parametric flood insurance transactions could be a big deal for the market and could dramatically expand availability of flood coverages in parametric form.
ICEYE said that the comprehensive and accurate nature of its solution will help to lower the basis risk associated with the parametric insurance, “ensuring that payouts are both timely and in line with expectations.”
The flood data will also help to inform the response and recovery decisions made across the region, the company added.
“At UNDP Ghana, we are committed to supporting integrated development solutions that build resilience across society to protect Ghana’s development progress,” explained Angela Lusigi, UNDP Country Representative. “This project to develop an innovative insurance solution for managing flood risks and to provide rapid payouts as a safety net for poor and vulnerable urban communities is welcome. It will serve as a boost to government and private sector efforts to provide wider access to insurance and risk finance. By blending the financial-solution expertise developed by the government, with the long-term development and governance support offered by UNDP in partnership with the private sector, we will be able to advance Ghana’s ambitious development agenda.”
“This alternative risk transfer scheme will be the first of its kind in the region and shows the desire of all parties involved to innovate in order to break barriers, bring down basis risk, and improve disaster recovery outcomes. That includes the demand from the government to try something new, the innovation of all partners to construct this programme, and the power of ICEYE data to enable it,” added Lukas Sundermann, Senior Product Manager for Public Sector Solutions at Swiss Re, speaking on behalf of the IDF project team.
“We are extremely proud to be part of a project to help ensure the safety and financial security of those most exposed to floods in Ghana,” Rafal Modrzewski, CEO and Co-founder of ICEYE said. “By rapidly combining data from our satellite constellation with auxiliary information, we can inform decision making with an entirely new level of accuracy, consistency and resolution that has never been possible before. ICEYE’s data will be central to the success of this important project for the insurance sector and the global development community.”
At this stage it seems this is an exploration of the use of ICEYE satellite data and imagery for parametric triggers for this project, not yet confirmed.
Should ICEYE’s data and imagery be used to verify parametric payouts, once this project gets an insurance product live, it will be notable as a new third-party data provider and source of verification for parametric risk transfer contracts focused on flood risk.