JLT Philippines, a division of global insurance and reinsurance broker JLT, has signed an agreement with reinsurance giant Munich Re, to collaborate on the development of a parametric insurance solution to protect against typhoon/tropical cyclone risks in the Philippines.
The new innovative, parametric solution is called “One Storm Philippines,” designed to provide uncomplicated and rapid payout post-event. Unlike traditional insurance coverage parametric solutions, which are common in the growing insurance-linked securities (ILS) space, are structured to payout on pre-determined triggers, such as wind speed.
According to an announcement, JLT and Munich Re will jointly develop the new solution, in an effort to mitigate the impact businesses in the region face year-after-year from typhoon exposure. In fact, the statement claims that the region experiences up to twenty tropical storms each year, several of which become typhoons that typically result in widespread damage.
Chief Executive Officer (CEO) of JLT Philippines, Raul Tan, commented; “At JLT Philippines, we have a strong focus on providing innovations to the market and we are extremely proud to have partnered with Munich Re, working effortlessly together to provide our customers with a unique product that that not only protects their assets, but also changes the way insurance is viewed”
A statement on the “One Storm Philippines” solution explains that it enables risk holders to outsource typhoon related risks that were previously uninsurable, such as loss prevention costs, overtime costs, revenue losses, and minor losses below the property insurance deductible.
The solution is simple to monitor and measures triggers that offer financial support for loss prevention measures, while promoting rapid payout, which is essential for vulnerable and poorer parts of the world, as well as an uncomplicated process.
Furthermore, the statement explains that the solution can be customised so that users can limit their risks, while enabling risk holders to keep an eye on their triggered payout in real-time once a storm takes place, via onestorm.munichre.com.
Chief Underwriting Officer (CUO) at Munich Re CIP Engineering, Stephan Laemmle, said; “This product cooperation between JLT with their excellent market network and Munich Re’s research and product development expertise, showcases our ambition to be at the forefront of product innovation, and thus, shaping future market models responding to the needs and working to the benefit of our clients.”
The combination of JLT Philippines’ local knowledge and expertise, with reinsurer Munich Re’s insurance and reinsurance industry experience, is designed to help close the coverage gap with typhoon risk in the country.
It’s also an example of how re/insurance industry participants can work together to help close the protection gap in vulnerable parts of the world via the development and utilisation of parametric insurance, a part of the industry that is becoming more prominent as global organisations and countries start to understand the benefits of such a solution.
It’s encouraging to see a commercial offering to help bring reinsurance capital to bear in supporting interests in the Philippines against typhoon damage, so soon after the government has arranged its own parametric disaster insurance program and the recent Philippines catastrophe swap arrangement.