Swiss Re Corporate Solutions, the large commercial risk specialist unit of the global reinsurance firm, is expanding the utility of its parametric tropical cyclone insurance product with the help of Reask, a climate analytics and data company that uses machine learning techniques.
Reask is helping Swiss Re Corporate Solutions to expand its parametric windstorm solution, STORM, with Reask’s windspeed data set to be used as a parametric trigger input to provide tropical cyclone coverage to corporate and public entities exposed to the peril.
Swiss Re’s STORM parametric tropical cyclone insurance product was launched in hurricane-prone areas of the U.S. and the Caribbean initially, using the wind speeds reported as an input to its trigger.
But with Reask’s help the range of territories that can now be offered coverage expands globally, as Reask puts its machine learning technology to work in providing the necessary verified data for parametric triggers.
Metryc, Reask’s tropical cyclone risk modelling product, is designed for parametric insurance contracts covering natural catastrophe risks and now, outside of the U.S. and the Caribbean, Swiss Re’s STORM product will use Metryc to determine whether a policy is triggered.
Reask will act as a calculation agent for parametric tropical cyclone covers, developing triggers for and providing settlement data to, hazard intensity-based risk transfer arrangements.
Swiss Re Corporate Solutions said that all of the additional geographic areas covered by its STORM product will use data from Reask via its Metryc product, designed specifically for index-based policies.
So, it seems that Reask will construct the necessary indices for parametric triggers from the data it observes and augments with machine learning technology, to provide tropical cyclone triggers on a worldwide basis.
Reask’s Metryc Assess product can also assist in providing data to support the pricing and structuring of parametric solutions as well.
“Tropical cyclones continue to pose a major risk,” explained Martin Hotz, Head Parametric Nat Cat at Swiss Re Corporate Solutions. “Thanks to our collaboration with Reask, organizations around the world will have access to broader coverage, flexible use of funds and a speedier recovery with STORM.”
“Parametric solutions such as STORM help reduce the insurance protection gap,” added Thomas Loridan, CEO at Reask. “Until now, a lack of reliable observations in many tropical cyclone-affected areas have limited the deployment of such solutions beyond established markets. Our Metryc product provides complete global coverage, augmenting scarcely available observations through predictive modelling.”
From September 2021, Swiss Re Corporate Solutions parametric STORM product will be available to organisations around the world, significantly expanding the reach of Swiss Re’s reinsurance capital that underpins the parametric risk transfer arrangements.
It’s a great example of using technology to derive indices on which parametric risk transfer triggers can be based.
We expect this will be an increasing trend in risk transfer markets, as insurance and reinsurance capital providers look to advanced technology to help in making perils more understandable and therefore tradable, so risks can be better covered on a global basis, as well as across a broader range of insurance lines of business, including where parametrics have not been utilised before.