Nephila assists insurtech WorldCover with reinsurance via Lloyd’s syndicate

Emerging markets and climate insurance focused  insurtech start-up WorldCover has partnered with the world’s largest ILS fund manager Nephila Capital, who will now provide some of the firms reinsurance protection through its Lloyd’s syndicate 2357.

WorldCover is a technology driven insurance start-up that provides climate and weather linked insurance products using parametric triggers based on satellite data to smallholder farmers in emerging markets.

Well-funded, WorldCover is gaining traction and is now at the stage where reinsurance capital is a key consideration, as well as the efficiency of that capital (we’d imagine).

The company also has a reinsurance agreement with Swiss Re, reports suggest.

Given the climate and weather risk related focus of the insurtech, partnering with Nephila Capital is a natural fit as the investment manager is the largest with a focus on creating portfolios of catastrophe, weather and climate risk exposures.

It will also assist that Nephila itself understands technology better than most in the industry and has worked with a number of insurtech players so far.

WorldCover has just closed its latest funding round, a $6 million Series A led by MS&AD Ventures, the venture capital type arm of Mitsui Sumitomo Insurance Japan, as well as investment from Silicon Valley specialist Y Combinator, Western Technology Investment (WTI), and others.

WorldCover also benefits from a recent investment from the Catalyst Fund, a grant program funded by the Bill & Melinda Gates Foundation and J.P. Morgan.

In tandem with the funding, WorldCover announced its new partnership with Nephila Capital, who will now provide reinsurance capital in case of loss via the firms Lloyd’s of London syndicate 2357.

WorldCover is rolling out a parametric drought insurance product in Africa right now, using a policy that pays farmers when there is a drought.

The company uses algorithms combining weather and crop yield data from satellites and remote weather stations, with data from a growing network of farmers. This enables the firm to price risk effectively and quickly, as well as make rapid payouts.

“WorldCover has uniquely combined technological advances and developed a solution that allows us to support smallholder farmers caught in conditions that are worsening due to climate change,” explained Christopher Sheehan, WorldCover CEO and co-founder. “With the rise of many insuretech startups around the world, we are excited about this successful round of Series A funding as it enables us to accelerate growth in existing markets while working towards expansion into new regions. This will allow us to fulfill our ultimate vision of making the world more resilient to climate change.”

“Our algorithms are specifically calibrated to rainfall events by region and crop type, automatically triggering instant payouts to insured farmers through mobile money services like M-PESA,” Jason Schapiro, WorldCover Lead Engineer further explained. “This eliminates the need for time-consuming loss assessment and other traditional insurance practices that are incompatible with serving remote farmers in emerging markets.”

Already active in Africa, WorldCover intends to target global growth in emerging markets, with ventures into Asian and Latin American markets now planned.

WorldCover also plans to add new products to its offering, so moving beyond rainfall linked drought to coverage for perils including tropical storms and cyclones.

The company has hired to assist with its growth plans, adding: Head of Research Melanie Bacou, a former agricultural economist and data scientist at the International Food Policy Research Institute; Director of Operations Kofi Agyare, previously Uber Country Manager, Ghana; and Head of Insurance Teresa Schorstein, a former weather risk originator at reinsurance firm Swiss Re.

With Nephila Capital onside for reinsurance capital as well, WorldCover is well-positioned for growth, working with a team that has an understanding of the challenges associated with parametric data-driven insurance products, as well as emerging market climate risk exposure.

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