San Francisco based Metabiota, a company focused on risk analytics for epidemics, has launched its first commercial risk modelling platform and a preparedness index to help insurance or reinsurance firms and ILS funds or investors understand and underwrite epidemic risk.
In announcing the launch today Metabiota said that it has signed strategic agreements with reinsurance giant Munich Re and In-Q-Tel, Inc. a not-for-profit venture capital firm partly funded by the CIA that aims to speed development of technologies of interest to the U.S. intelligence community.
Metabiota believes its platform to be the first that enables the estimation of epidemic preparedness and risk, including the frequency, severity, duration and cost of outbreaks.
The platform combines epidemic risk analytics, historical data, disease scenarios, as well as insights from public health analysts and global epidemiologists, offering the insurance and reinsurance industry a tool to help develop new epidemic insurance solutions, bu providing a better understanding of and ability to underwrite epidemic risk.
“We believe that when risk can be properly assessed and mitigated by insurance, the world will be more prepared and able to manage these events,” explained Bill Rossi, CEO of Metabiota.
“At the same time, we’re helping the insurance industry build new revenue streams at a time when their core business is under threat by new business models and technologies. Metabiota’s use of big data and software to model epidemics is truly revolutionizing the insurance industry.”
The platform also helps governments and organisations to better understand the threats posed by epidemics and pandemic outbreaks, offering them data and modeling tools required to assess the potential financial impact of a major health-related event.
For insurance and reinsurance firms the Metabiota platform offers them insight into how diseases propagate and enables them to quantify the risk posed by epidemics.
With life and health reinsurance increasingly important to reinsurance firms looking for diversification, better risk analytics and modelling tools are vital to help re/insurers understand their potential exposure to pandemic like events.
The platform features 100-year historical disease database and a catalog of over 20 million risk scenarios describing the number of cases, deaths, hospitalisations, and also employee absence related to an epidemic event.
“Metabiota’s analytics and intelligence help us to push the boundaries of insurability by protecting companies and local economies from the financial loss related to epidemics,” stated Tom van den Brulle, Head of innovation, Munich Re. “This really is the next frontier for the insurance industry – given the high risk of infectious disease outbreaks, it is imperative that we find new ways to manage and finance these risks for our customers.”
“Infectious disease outbreaks present a growing security threat to the United States,” added Eugene Chiu, Partner, Investments, IQT. “Metabiota provides capabilities to better understand infectious disease risk via open source data fusion and sophisticated epidemic simulations.”
The Metabiota platform is also applicable to insurance-linked securities (ILS) funds and ILS investors, which is now particularly apparent since the recent completion of the World Bank supported Pandemic Emergency Financing Facility (PEF) and issuance of the pandemic catastrophe bonds that underpin this.
In fact, Metabiota believe that their risk modelling platform, data analytics and tools including the The Metabiota Preparedness Index, a proprietary global preparedness index that measures national capacity to detect and respond to outbreaks, could be utilised to help the capital markets and ILS specialists underwrite more pandemic linked risks in future.
Simon Tuck, Head of Product at Metabiota, explained to Artemis; “The Metabiota platform can facilitate capital market risk transfer in two primary ways. First, it delivers a unique and proprietary “Metabiota best” view of active disease outbreaks with pandemic potential that combines data from multiple reporting sources to present metrics on cases, deaths, duration – most appropriate for use in parametric capital market transactions.
“Secondly, Metabiota has created the largest, most granular, and most comprehensive stochastic event catalogue of potential infectious disease events. This enables enhanced transparency into pricing and payout potential for Insurance-Linked Securities (ILS) investors.”
The index could be particularly interesting, as it may provide a way to measure the onset of a health crisis that could become an epidemic or pandemic, thus enabling forecast-based action to be taken for distribution of funding and aid.
The index offers users, such as insurers, reinsurers, governments, organisations etc, a way to understand how well equipped each country (and neighboring countries) are to manage an epidemic, based on public health infrastructure, physical and communications infrastructure, bureaucratic and public management capacities, financial resources to underwrite disease response, and risk communication.
Metabiota said that the World Bank has referenced this index as a tool that can allow the future of risk to be assessed.
Such an index would fit well with the ambition of the PEF, which looks to payout to countries in advance of the worst pandemics occurring to help them to prepare, so mobilising aid before the event to help in prevention, resilience building, etc.
This fits with the paradigm of forecast-based action that we wrote about recently, an area that the capital markets may find opportunities to support funding needs.
Gaining insights and visibility into epidemic risk and the preparedness of nations to respond to epidemic risk is key for social protection, but also vital for re/insurers underwriting health risks, ILS investors backing pandemic catastrophe bonds and has many other risk transfer use-cases.