One Concern, a resilience-as-a-service solutions provider with a focus on providing upfront information on potential financial impacts of climate related loss events, and broker plus advisor WTW, have teamed up with a goal to accelerate the adoption of parametric insurance solutions.
As we’ve explained before, One Concern provides climate related analytics, but with a unique approach in using artificial intelligence to try and understand, estimate and forecast the potential implications of climate and weather catastrophes.
The company recently launched its first full digital twin, alongside a data service to help companies understand the implications of events, which we explained has ramifications and provides a glimpse of the future that can help in designing risk transfer and insurance-linked securities (ILS) products.
Now, One Concern and WTW are going to work together to provide the U.S. insurance market with the One Concern Resilience Score (1CRX), which they believe can “facilitate a better understanding of dependency risk and accelerate the adoption of parametric insurance.”
The Score indicates the vulnerability a business has to downtime, linked to the fragility of the infrastructure a business relies upon, such as the power grid, transportation infrastructure, and related community areas, as well as indicating direct property damage.
The resilience scores will be incorporated into WTW’s client-facing analytics platforms, as well as its broking workflow, to deliver a more complete picture of existing building damage analyses, as well as the potential impact of vulnerable external dependencies.
Through this integration, the pair believe the insights and data will support design and delivery of alternative risk transfer solutions, including parametric risk transfer or parametric insurance products.
One particular area of opportunity is in identifying gaps in traditional insurance coverage, using the One Concern score and data insights, allowing for discreet parametric insurance arrangements to be constructed and priced, to fill any gaps.
“We’re thrilled to incorporate our resilience score into WTW’s cutting-edge analytical solutions and demonstrate to clients that the biggest threats to their business derive from climate-related dependency risk,” explained Ahmad Wani, Co-Founder and CEO, One Concern. “WTW’s ability to apply the latest in disaster science will enhance their clients’ decision-making process in choosing how best to integrate physical climate risk into their resilience strategy.”
“We are always looking for ways to help our clients thoroughly understand their risk profile, along with the opportunity for us to bring actionable insights and solutions to help them smartly reduce those risks; the ability to evaluate ‘the outside the fence’ risk dynamic is of critical importance, and now we can do something about it,” added Ben Fidlow, Global Head of Risk Analytics, WTW. “One Concern’s investment in this area is quite impressive, and we are happy to deliver this new capability to our clients. This will help us reduce the basis risk in traditional property insurance and help our clients create long-term, sustainable resilience plans.”
Advanced technology, such as One Concern’s, can provide greater visibility of potential natural hazard and climate related impacts, which can be beneficial both for risk protection buyers and also those markets deploying insurance or reinsurance capacity.
There are product-related ramifications as well, as these upfront views of risk gaps and risk impacts can provide a data-structure to underpin triggers for insurance, reinsurance, or other forms of risk transfer.
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