Arbol, a global climate risk solutions platform, has announced its parametric reinsurance solution has delivered one of the first payouts for loss or damage attributed to Hurricane Ian.
The $10 million payout to Centauri Insurance, a property and casualty insurer operating in nine U.S. states, was executed less than one month after Ian’s landfall.
Last year, Arbol developed a fully collateralized reinsurance solution for insurance carriers exposed to named storms that pays out based on predefined, objective parameters.
The company’s parametric reinsurance product covers hurricane risks in Florida and other U.S. states. The parametric loss is calculated at individual policy location level and the payout is based on a reinsurance layer protecting the entire portfolio.
Sid Jha, Arbol Founder and CEO, said: “The parametric reinsurance product enables claims to be settled rapidly, months or sometimes even years faster than the rest of the industry.
“Because these policies pay out on objective data triggers, we can bring much needed efficiency and transparency to the insurance and reinsurance sectors while providing essential financial relief in the wake of a climate disaster like Hurricane Ian. Parametric solutions allow for claims to be settled rapidly and transparently, which is ideal for helping businesses in states like Florida with outsized risk exposure to hurricanes and enables long-term financial resilience.”
Location-level payouts, Arbol explains, are determined based on the distance of each location from a particular hurricane track and the maximum sustained wind speed captured along the hurricane track.
The data and calculation mechanism is transparent as it is pre-agreed before the contract commences, the firm noted.
Arbol’s solution pays out using National Hurricane Center data provided by dClimate, the firm’s exclusive data partner, described as a leading decentralised climate information ecosystem.
Ricardo Espino, CEO of Centauri Insurance commented: “During recent years, back-to-back storm seasons have battle tested insurers in our region and changed the landscape of our insurance industry.
“As insurers, we have to start thinking outside the box and seek innovative solutions for mitigating risk. Partnering with a cutting-edge company like Arbol, has given Centauri the ability to process claims faster in the aftermath of Hurricane Ian by utilising real climate data and state-of-the-art technology.”
Analysts estimate a re/insurance industry loss of as much as $57 billion. This estimate accounts for wind, storm surge and inland flood losses from Hurricane Ian’s landfalls in both Florida and South Carolina.
Arbol highlighted that processing claims and distributing payouts from homeowners, businesses, and other entities across Florida could take anywhere from a few months to years, as was the case with claims associated with Hurricane Irma.
In the first half of this year, the Arbol platform transacted $100 million gross written premium (GWP), outpacing all GWP written in 2021. According to the firm, parametric programs in agriculture and energy sectors – with ongoing expansion into the leisure/travel and climate risk sectors – are the ones leading the platform’s growth.
