A new direct to consumer parametric earthquake insurance product has been launched for the Latin America market by Super Seguros Inc., with reinsurance backing from global player Munich Re.
Super Seguros, acting through its subsidiary which has become Mexico’s first approved insurance managing general agent (MGA), launched Super Temblor© as the first consumer focused parametric earthquake risk transfer product for the Latin American marketplace.
Covering retail insurance consumers, Super Temblor is a modelled intensity cover for homeowners and renters living in Mexico City and will offer rapid payouts through the use of parametric triggers.
“For the first time, homeowners and renters in Mexico City will be able to get automatically determined payments within days,” explained Sebastian Villarreal, CEO and co-founder of Super.
“We are able to provide this fast-payment solution thanks to world-class modelling from ERN, tremendous vision from Mexican insurer Seguros Atlas, and Munich Re as an experienced partner for co-creation and solid reinsurance capacity,” added Dario Luna, President and co-founder.
Super Temblor offers a new approach to earthquake insurance coverage, considering the unique local ground conditions to estimate granular quake intensity information as an input to the parametric trigger.
Mexico City is one of the most earthquake exposed and vulnerable cities in the world, so Super Temblor is pitching as an innovative fast paying, no-adjuster solution to narrowing the underinsurance gap in the city, as just 6.5% of homes are insured in Mexico.
Marco Ahedo, co-founder and Chief Underwriter of Super, also commented, “By using an independent model for local intensities, and extensive data analysis of our own, we were able to bring to market an affordable cover for highly exposed areas of our city.”
As well as being innovative in terms of offering parametric insurance coverage in a region where it is usually the domain of larger reinsurance style transactions, Super Temblor is also embracing digital with digital first sales, servicing and claims processing for its parametric insurance solution.
Seguros Atlas, one of the largest Mexican carriers, while provide the policies offering coverage as high as 500,000 pesos of aggregate limit (roughly $25,000 USD) and with premiums as low as 50 pesos per annum (approximately $2.5 USD).
Michael Schittek, Commercial Director at Seguros Atlas explained, “With the strategic partnership with Súper we aim to complement our product portfolio and demonstrate how innovative solutions can be created and coexist to expand the insurance market and it’s penetration.”
Backed by capacity from global player Munich Re, Super has significant committed reinsurance capacity available for distributing Super Temblor in Mexico City.
Richard Schuster, Director Capital Partners for Munich Re in New York, said, “Munich Re, together with its partners, is striving to develop innovative solutions which not only help to increase insurance penetration, but close gaps in traditional coverages and provide an improved customer experience. Parametric insurance, which complement conventional coverages, will benefit consumers with a quick payout in the aftermath of natural catastrophes.”
Super’s launch is another example of the innovative coverage available with parametric risk transfer triggers and by targeting a region like Latin America is has the potential to increase protection for insurance consumers in a region exposed to significant earthquake risks.
These parametric solutions require access to efficient reinsurance capital in order to allow them to scale, at affordable premiums. In this case Munich Re is the provider, but as they scale up the capital markets could also become a provider of capacity to such programs in years to come.