Skyline wins! ARC pays out, parametric vs ILWs

The partnership will significantly broaden Augment Risk’s bespoke parametric specialty offerings

Skyline Partners and NFU Mutual have WON! the Innovative Product of the Year Award – Commercial Lines, for their Parametric Heat Stress Insurance for dairy farmers, at the prestigious National Insurance Awards. “We’re absolutely chuffed to have received this honour, and to have worked with NFU Mutual to create the product,” said Skyline Partners Co-Founder and Executive Director Gethin Jones.

Less milk from heat-stressed cows

According to NFU Mutual, heat stress is a priority risk for 41% of dairy farmers, but 70% have yet to take further steps to reduce the risk.

“Part of the power of parametric insurance lies in its ability to cover the risks that conventional insurance cannot,” said Gethin. “One example of that is the risks of losses which are difficult to pin down in pounds and pence. Old-fashioned insurance just cannot cope with that. Our heat stress product is a great deployment of parametric to make an uninsurable risk insurable.”

Customers are offered pre-determined pay-outs based on a trigger event, while satellite and weather-station data is constantly monitored and recorded. If the temperature limits in the policy are exceeded, pre-determined claims payments are made upon expiration. Farmers can use payments to cover the cost of losses in production and improve their farm infrastructure to combat the effects of heat stress. Four coverage levels are available to suit risk appetite, budget, and herd size.

Glenister to lead Miller into parametric insurance market

Broker Miller Insurance Services is the latest to set up a parametric division, led by Alice Glenister, previously Director of Insurance at Mastercard. She will lead the long-established wholesaler’s newly formed parametric team. As Miller looks to expand the scope of triggers beyond the natural catastrophe space, they say clients will benefit from a diverse range of solutions tailored to their specific needs and risk profile.

“Working across a range of sectors, we will be able to provide coverage for those risks that were once considered too complex or too difficult to insure, allowing Miller clients access to enhanced risk management capabilities. By harnessing the power of parametric solutions, Miller are poised to redefine the way their clients protect their assets and mitigate risks in an ever-changing world,” said Glenister.

ILWs vs Parametric Re

Industry Loss Warranties (ILWs) are a well=established indexed-based reinsurance instrument that pays out when the estimated total industry-wide insured loss arising from a specific, covered event or group of events exceeds an agreed threshold, as calculated by a third party.

They’re good, but they have drawbacks. Are parametric reinsurance structures better? To answer this complex question, Skyline Partners own Laurent Sabatié and Ken MacDonald spoke with Artemis, the industry’s leading publication on alternative insurance solutions. Read the whole article: Parametric Structures minimise or eliminate limitations of ILWs.

ARC pays out over $170m… and celebrates ten years

African Risk Capacity (ARC), an agency established by the African Union to help governments improve natural disaster responses, made parametric payouts of more than $170m during its first ten years. Originally providing only drought insurance, ARC now offers agriculture coverage both for crops and livestock, as well as for floods, tropical cyclones, and health-related outbreaks and epidemics.

Lesley Ndlovu, CEO of ARC, said: “Behind these figures are communities across Africa that benefited after they were struck by natural disasters. We are also pleased by the number of countries that now utilise insurance as part of their disaster risk financing matrix.”

Alongside its work with governments and providing insurance protection to humanitarian agencies such as the World Food Programme, Start Network, and the UN High Commission for Refugees, ARC works with the private sector through reinsurance to protect small to medium-scale farmers’ incomes.

ARC’s goal is to expand its coverage across all 55 African Union countries, with Ndlovu warning that the latest data shows climate change threatening the economic livelihoods and lives of an estimated 700 million people.

Parametric in the Clouds

Hannover Re has applied parametric reinsurance to cloud downtime risk. The global reinsurer privately issued the $13.75 million Cumulus Re (Series 2024-1) cloud outage catastrophe bond, modelled by Parametrix Analytics. It’s another innovative use of a parametric trigger in the expanding cat bond space.

The bond protects Hannover Re against cloud outage loss accumulation within its large cyber reinsurance portfolio. Parametrix, through its portfolio risk modelling and ongoing cloud performance monitoring, enabled this deal using its cloud model based on historical cloud outage data, collected by the Parametrix Cloud Monitoring System (PCMS).

DID YOU KNOW…

… that Skyline partners has teamed up with Spire Global to bring the power of satellite observation to parametric insurance?

Spire collects knowledge and insights from space about Earth and human activity on and above its surface, including detailed information on global shipping activity and real-time weather data. Skyline and Spire will collaborate to develop new transfer tools which will help close the coverage gap for clients in the marine, aviation, and agricultural sectors.

Parametric Primer

In parametric insurance, the underwriter’s assessment is focused on the risk of the loss event occurring. This allows greater price certainty, which makes parametric insurance pricing much more stable over the long term. It also eliminates the effect of inflation on the cost of coverage.

During soft-market cycles, parametric insurance helps to differentiate and add value for insurers in a highly competitive marketplace. When prices are high and rising, parametric can help to cover gaps and exclusions, and to ensure price certainty.

Read the whole of Skyline’s Parametric Primer.

About Skyline

Skyline Partners helps re/insurance underwriters, brokers, agents, affinity partners, and government agencies solve risk challenges with innovative, data-driven solutions. A private-equity-funded UK insurTech dedicated to the development and computation of parametric insurances, Skyline deploys, as necessary, tools such as its proprietary InsDex platform, its MGA accreditation, and its expertise in data science to build and operate insurance products which create insurability for clients world-wide. Loyd’s-Lab alumnus Skyline has the technology, expertise, and relationships to transform any data stream into transparent, reactive protection delivered with minimal frictional costs and no surprises.

• Any peril • Any sector • Any geography • Any beneficiary

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