The use-cases for parametric triggers in insurance and reinsurance continue to expand, as parametric coverage gains in popularity and technology and data advances make more complex products possible, as evidenced by a recent launch from QOMPLX and Chaucer.
QOMPLX is a provider of intelligent decision platforms and also operates a managing general agent (MGA) to provide insurance and reinsurance products, while Chaucer is the well-known international specialty insurance and reinsurance group owned by leading Chinese reinsurer China Re.
The pair have launched WonderCover, which they call “the first multi-peril parametric insurance product specifically tailored to the needs of small to medium-sized enterprises (SMEs).”
The parametric WonderCover insurance is designed to assist small and medium size businesses with protecting themselves against issues including business interruption that occur after qualifying peril events, with fast payouts promised enabling rapid recovery.
The product is complementary to SME’s traditional insurance protection and its initial offering will combine protection triggered by specific Cyber, IT interruption, and Terrorism events.
Payouts will be automatic with amounts predetermined, triggered on the occurrence of defined events.
“We aim to provide clients with creative underwriting products and a first-class service, and our partnership with QOMPLX will deliver this,” explained Andrew Bauckham, Senior Political Violence Underwriter at Chaucer. “UK SMEs want smart cyber and terrorism solutions, and WonderCover definitely provides this.”
The product will be offered through QOMPLX:MGA and is available on the Acturis platform, while the MGA will also be partnering with broker platforms and other forms of distribution, while underwriting capacity will be provided by Chaucer.
“WonderCover is a first-of-its-kind product that provides a much-needed solution to two of the most critical business risks facing organizations in the UK today,” Raveem Ismail, General Manager, QOMPLX:MGA said. “WonderCover responds to the market demand for a custom-made cyber and terrorism policy that provides certainty and transparency, combined with benefits of a straightforward application process and the prompt payment of claims.”
The specific triggers for the initial products are as follows:
- Cyber Data Breach – If a business suffers a data security breach requiring the Insured to notify the Information Commissioner’s Office as mandated by GDPR.
- Cyber Service Outage – if there is an unplanned interruption of electronic services provided by a named critical partner, resulting in an outage duration of more than 48 hours.
- Terrorism Interruption – Fixed payment for a terrorism event occurring within the Insureds Postal Code, regardless of physical damage.
Pro MGA Solutions has supported the launch of the parametric product for QOMPLX, as it supported he incubation of the QOMPLX:MGA and it remains housed within London-based Pro MGA Solutions Limited.
Danny Maleary, CEO of Pro.MS said, “We are delighted to support QOMPLX in their launch of WonderCover – a truly innovative product developed in partnership with a leading global specialty insurer that addresses a significant gap in the market.
“The growth of innovative technology-powered solutions is critical to the future of the insurance sector, and WonderCover is the perfect example of non-traditional, custom cyber and terrorism cover that solves fundamental challenges for insureds that traditional insurance is not delivering.
“And we are continuing to see huge interest in the MGA model from entrepreneurs who want to set up a new business and are searching for capacity, as well as demand from global specialty re/insurers looking for MGAs to fit their specific, niche strategic initiatives.
“As well as further expanding our international partnership with QOMPLX in the near future, we are also currently managing a strong global deal pipeline for MGA launches in the new year, with half a dozen potential new launches currently under development.”
Alastair Speare-Cole, President & GM of QOMPLX:INSURANCE commented, “QOMPLX:MGA will rely on Pro.MS’ MGA not only for support in fulfilling our regulatory obligations but on their wide industry experience of Lloyd’s international insurance distribution.
“With WonderCover, we are proud to simplify the process of buying coverage against complex events like cyber and terrorism and increase the availability of insurance and the transparency behind the product.
“For WonderCover, QOMPLX:INSURANCE leverages proprietary cyber and terrorism modeling capabilities to provide a simple fixed limit offering designed to cover multiple man-made perils.”
These parametric risk transfer products can provide valuable additional protection to businesses when significant events occur and by offering a multi-peril product QOMPLX is aiming to make them even more useful.
As ever, the reinsurance of these types of coverages can be very appealing to insurance-linked securities (ILS) funds and other collateralised players, given the binary nature of the risks making for more simple diversification within portfolios.
QOMPLX believes that there is a growing demand for parametric products, as education about the coverage becomes increasingly widespread.
Bringing parametric trigger technology to these specialty lines exposures of cyber and terror risks makes a great deal of sense for businesses looking to hedge the downside associated with such events.
Raveem Ismail, General Manager, QOMPLX:MGA, told us, “Given how technology has progressed in recent years, WonderCover shows that parametric triggers can be used outside of large Nat Cat transactions, to bring true resilience to the intangible value-at-risk for every SME. It has always been our ambition to widen the scope of coverage beyond even what we currently offer, towards all sources of material income disruption.”