Metabiota provides risk analytics for epidemic risk transfer products

San Francisco based Metabiota, a company focused on risk analytics for epidemic, is working with reinsurance and insurance companies to create risk transfer and financing solutions that can provide epidemic or outbreak insurance.

Metabiota is interesting as they assist with the understanding of epidemic outbreaks and spread, crucial to those insurance and reinsurance providers looking to create epidemic risk transfer solutions. By better understanding the outbreak of an epidemic, being able to track its spread and impact, products can be created that trigger payouts at appropriate times to assist countries to recover more quickly.

Metabiota has been working with the African Risk Capacity (ARC), helping the African risk pooling insurance company to develop a risk model and analytics to enable it to create the first sovereign insurance cover for disease outbreaks and epidemics, which is being developed in response to the Ebola crisis.

Dr. Richard Wilcox, founding director general of the ARC, commented; “Metabiota’s insights are a critical component to helping us develop a new product that meets the financing needs of African governments. Outbreak and epidemic insurance will provide immediate funding to operationalize peer-reviewed and approved contingency plans for early intervention activities. New applications of financial tools, like insurance, can significantly improve the speed of funds to affected countries and shorten the time between event and response.”

The company is also working with the world’s largest reinsurance firm Munich Re, and has helped the reinsurer to develop epidemic risk transfer tools for clients.

“We’ve worked closely with Metabiota for the past two years – the company’s analytics and expertise in epidemiology are outstanding,” said Stephan Reulein, head of Financial Solutions Life at Munich Re. “Together with Metabiota, we’ve created and commercialized innovative epidemic risk transfer solutions in our life insurance business. Metabiota’s ability to monitor and analyze epidemic risk worldwide and in real time enabled us to build these new financial mechanisms.”

“It’s evident now that epidemics are not one-off events, but demonstrate distinct patterns similar to other natural catastrophes. And just as natural catastrophes can be insured despite the diversity and uniqueness of the events, epidemics are no exception,” said Dr. Nathan Wolfe, founder and CEO of Metabiota. “We are capturing unique data on infectious diseases and by partnering with top organizations, like ARC and Munich Re, are creating financial mechanisms to facilitate the movement of critical resources within affected countries to manage the spread of disease, while minimizing the macroeconomic impact.”

Metabiota has recently secured $30m of venture funding to help it to grow its analytics expertise and offering, while delivering epidemic risk management worldwide.

By creating a detailed data driven understanding of epidemic and infectious disease threats, Metabiota could potentially have application within the ILS market or even for catastrophe bonds in future. At the very least it can help risk transfer markets to price epidemic risks, the first step on the road to enable risk transfer.

The work Metabiota is undertaking with organisations like ARC and Munich Re could result in the ability to create parameters for predicting, measuring and tracking outbreaks and epidemic impacts. The data could therefore be used to construct indices, or perhaps even parametric triggers, enabling the creation of predictable risk financing and transfer tools, with rapid payouts.

That is exactly what the world needs to build resilience to and recover from epidemics and disease outbreaks. Availability of financing at the right time, as well as the insights to help to encourage and build resilience is key.

Metabiota, with its data analytics platform, could become a key player to support the creation of risk transfer markets for disease outbreaks and epidemics. The resulting structures might even become conducive to the capital markets providers of risk transfer capital, such as insurance-linked securities (ILS) players in the future. Definitely a company to watch in this space.